The Impact of Status Quo Bias on People’s Choices

In behavioral economics, status quo bias is a cognitive bias that refers to when people are faced with the choice of maintaining the status quo versus making changes. People tend to maintain the current state rather than take actions to change it. The existence of status quo bias challenges the traditional economic hypothesis that people are rational. In this essay, we show the impact of status quo bias on people’s decision-making, and its possible impacts through three experiments, namely, beverage manufacturers’ new products, elections, and food preferences. Our analysis proves that managers need to fully consider people’s preferences for the status quo when launching new products, and then appropriately reduce their estimates of expected profits to ensure the accuracy of forecasts.