In economics, status quo bias can cause individuals to make seemingly non-rational decisions to stay with a sub-optimal situation. For example, over a lifetime, it is rational to save for a pension.What is the meaning of status quo in law?
Definition of status quo : the existing state of affairs seeks to preserve the status quo : the current situation : the way things are now : the existing state of affairs specifically : the last actual and uncontested state of affairs that preceded a controversy and that is to be preserved by preliminary injunction — compare status quo anteCan loss aversion explain the status quo bias?
Loss aversion, therefore, cannot wholly explain the status quo bias, with other potential causes including regret avoidance, transaction costs and psychological commitment. A status quo bias can also be a rational route if there are cognitive or informational limitations. Decision outcomes are rarely certain, nor is the utility they may bring.What is an example of a present situation bias?
For example, over a lifetime, it is rational to save for a pension. However, some individuals may have a reluctance to change their current situation and take out a pension. In addition to status quo bias, this refusal to save for a pension is related to a present situation bias (preference to maximise utility in the present moment)