December 7: Behavioral Economics: Status quo bias
People usually prefer to stay with the status quo because it's familiar and comfortable, whereas change can be costly, risky, or inconvenient.
This week, facts are published in partnership with Amazon’s Behavioral Economics experts. Awareness of frameworks and mental models such as these help us improve decision making.
Source: Thought Co
Published: December 2019
Behavioral Economics: Status quo bias
What is it?
People often prefer to stay with the status quo because it is familiar and comfortable, whereas change can be costly, risky, or inconvenient. Status quo bias is also known as default bias.
What are examples?
Subscribe & Save – Amazon auto-delivers your items on a regular schedule, without having to place a new order each time.
free trials – after a free trial ends, a subscription service may automatically sign us up for a paid subscription.
retirement savings – we are more likely to accept the default amount for contributions to a retirement account like a 401(k) than change the value.
How can we make better decisions?
As a builder, the defaults we set should reflect what most customers would choose given unlimited time, energy to decide for themselves.
As a customer, it’s worthwhile to slow down and consider every option when making high-stakes decisions like how much to invest in retirement, which health plan to choose, or whether to become an organ donor.
Bonus: Read the 1988 paper that coined the term.
Did you appreciate the fact today?