Status Quo Bias: Is it human
habit to prefer current situation or changes?
Introduction
People normally oppose changes. The reasons
for resisting change and preferring a status quo has always been the same; such
as fearing risks, an attitude that make people to desire to stick to the
familiar, seeing not the potential benefits of changing, lacking a model to
follow to a change, fear of failing, fearing of hard work after the change and
seeing change as un-necessary
burden (Lee and Roberts, 2009). Thus, one can find many people
have the same thing for breakfast, or walk to school or work in exactly the
same pattern. The inability to be flexible can cause people to become upset
when such situation forces them to make a choice, and this always close people’s
eyes to potential alternatives (Baron, 2008).
People tend to stick to the
old, even when they would choose the new if they were starting afresh. This
effect is also called the “endowment effect” a situation where people are
unwilling to give up what they have for what they would otherwise prefer. (Samuelson
& Zeckhauser, 1988, Baron, 2008). One explanation for this is loss aversion
(situation of disliking loss) (Samuelson & Zeckhauser, 1988, Baron, 2008)
However, many real world
decisions exert additional pressure for status quo choices mainly due to fear
of the future which is always uncertain (Samuelson & Zeckhauser, 1988)
People may see the losses
as greater than the gains, even if this is not the case (Kiser, 2010).Resistance
to change is very common in different places of work as people fear changes and
therefore they would like to resort to status quo due to fear of loss of jobs,
power and influence when there are introduction of new systems on how work is
supposed to be done (Stephen and Shannon Wall, 1995).
Fleming et al. (2010)
explain that it is common to assume that when people face difficult problems
which create difficult choices, they often accept the status quo. In other words,
people do not do anything at all to solve the problem. People avoid both action
and change. They are biased to keep things the way they are and to avoid risks
associated with change.
However, in today’s world,
change is the one among the things that are constant ; thus, organization and
individuals need to develop the capability to change and to react to changes in
their industries more quickly so as to capitalize on new opportunities that
emerge from changes(Stephen and Shannon Wall,1995).
In the organizations and at individual
level, the status quo bias can be manifested by the signs of hidden resistance,
where the person may pretend to comply but tries to sabotage the effort or
delaying in acting (Stephen and Shannon Wall, 1995).
The purpose of this paper
is to see how people make decision and a great question to be examined using
action logics is whether the preference of status quo bias is a human nature or
the laziness of human consciousness on making sound decisions.
LITERATURE REVIEW AND THEORETICAL MODEL
Status quo bias
The status quo bias is a
cognitive bias which leads people to prefer that things stay the same, or that
they change as little as possible (Sherfin, 2008). In addition to that, it is a
situation where people choose to do nothing or maintaining one’s current or
previous decision without a change (Samuelson & Zeckhauser, 1988)
As stated earlier, Status quo bias occurs due to fear
of risks, an attitude that make people
to desire to stick to the familiar, seeing not the potential benefits of
changing, lacking a model to follow to a change, fear of failing, fearing of
hard work after the change and seeing change as un necessary burden (Lee and Roberts, 2009).
General examples of manifestation of Status quo
bias
Status quo bias which is a cognitive bias plays a role in a number
of fields, including economics, political science, sociology, and psychology, and numerous studies have been conducted on
the status quo bias to look at ways in which this bias influences human
behaviour (Minniti et al., 2007). For example when faced with new options, decision makers often stick
with the status quo alternative such as to follow customary company policy, to
elect an incumbent to still another term in office, to purchase the same
product brands or to stay in the same job (Samuelson & Zeckhauser, 1988),This could be due to seeing not the
potential benefits of changing, lacking a model to follow to a change, fear of
failing, fearing of hard work after the change and seeing change as un necessary burden (Lee and Roberts, 2009).
When changes are introduced at work place or
in the business such as the use of online purchasing, online ordering and
communications and necessary use of computer, people tend to fear especially
those whom the practice appear new; so fear comes because of lack of abilities
to cope with the changes and a doubt to be able to continue to do a good work.
As a result fear grips on loss of jobs, and this leads to increased stress that
can damage morale and work performance (Agarwal and Ferratt, 2001)
Moreover, Status quo bias examples can also be seen in many
transaction-decisions where the manufacturers introduce a default option.
Research shows that no matter what those default options are, many people tend
to stick to them (Thaler & Sunstein, 2008). In most telephone companies it
is called “campaign phones”, and they get a lot of commercial-time.
The effects of status quo bias in everyday life
Status quo bias becomes obvious when consumers
display brand loyalty for a product when there are considerable brand choices.
That is, initial purchase and use of a brand increase the likelihood of
repurchase in a subsequent consumption decision. This behaviour is only present
because of status quo bias (Jeuland, 1979)
The effects of status quo may bring about
limitation of the use of human brain potential, where as it prefer the current
status other than change which can be equaled to the crisis situation where
human brain potential can be used more than 10% at the state of crisis (Braud,
2001)
Status
quo bias can unconsciously place unnecessary limitation on people’s inner
development or outer achievement; this makes people to fear to violet the
suitable family or collective ceiling that is deemed possible or acceptable.
This feeling comes to people who feel that they have gone beyond their parents
or kinship group members in worldly achievement. Status
quo bias comes as unconscious fear of flying too high and loses
connection to family and roots. For example having the title “Doctor” attached
to their names felt as too foreign or too much to live to (Ruumet, 2006)
In addition to the above, Status quo
effects account for diverse economic phenomena; for example the difficulty of
changing public policies, preferred types of marketing techniques, and the
nature of competition in markets. The combination of loss
aversion with tedious choosing implies that if an option is designates as the
default, it will attract a large market share (Thaler & Sunstein, 2008).
This
is why default options are such a powerful nudge. Defaults will have extra
nudging power because consumers may feel that this option come with an implicit
support from the default setter. By being aware of the role status quo bias plays in their own lives,
people can take steps to reduce the influence of this bias on their decision making (Thaler
& Sunstein, 2008)
Moreover, in some uncertain
circumstances individuals may stick to the status quo bias such as the same low
paying job; this may be due to the fact that the process of searching for a
better one is slow, uncertain and costly (Samuelson & Zeckhauser, 1988).This has the
effects of making people experience the same level of status in life.
What can be done to beat the status quo?
At the organizations level, only the top
management has the power and organizational influence to beat the status quo;
this can be done by taking measures that
can make the internal customers (employees) put in place the measures that beat
its peers in the industry and being futurists by focus on the organization
future positioning. On top of that, leaders can lead by examples through doing
what they say. This will plant the seeds of cultural change that can make
implementation and executions of the goals of organization smoothly
(Strickland, 1998)
Moreover, greater power is required in
changing against status quo bias; one of the means is recognizing and
generously rewarding those who exhibit new cultural norms that beat the status
quo bias. This helps to expand the coalition for beating the status quo in the
organizations (ibid). Communication is the key when one want to lead change
that beats the status quo; at work place for example the employees need to be
told on the need for making a change, allow employees to participate in the
planning that brings about the changes in the organization and make the
employees know that they are a part of change, this can help employees overcome
the feeling of powerlessness that can lead to stress and reduced work
performance (Agarwal and Ferratt, 2001)
Change
Circumstances and the
world changes, change is the only thing that is constant, however the bald fact
about change is that it is a threat, threatening to kill career, businesses,
friendship and life itself (Ross, 2003)
In a business world for example, change is the normal occurrence and it
happens so quick, if a manager doesn’t change, success in business enterprising
is becoming a dream; this is because many firms compete by changing continuously (Greenwald, 1996)
In addition to that, change in human
habits involves taking the right decision while dealing with palpitating human
life that is reverberating at the center of consciousness. That means changes
in bad human habits has to start with dealing with human emotional feeling such
as anger, alcoholism and hatred (Bricklin,2003).That means, if one want to
change his life from bad to good habit ; he/she must involve the sciuosness, a
feeling of dying out of self,then one can overcome the palpitating inward of
self ’I’, because out of self is where
all these humanly habit comes from (James,1890). In addition to the above moral
integrity or the commandments can be a good way to change people’s habit and
personalities from being people with bad undesirable habit to be the people
with acceptable good habits.Whereas people say, people’s habit cant change,
religion tells us that,habits can change.(Flier,1995)
THEORETICAL MODEL
The theory that is going to
lead this study is the Decision-Making Model by Baron (2008). The model has an
ideal seven rational decision-making models which are to be followed if a
rational person would like to make a sound decision making. These are:
1) Define the problem
2) Identify the decision criteria
3) Allocate weights to the criteria
4) Develop the alternatives
5) Evaluate the alternatives
6) Select the best alternative
7) Evaluate the decision
The status quo bias can be found in
steps 6. When evaluating alternatives for a problem a rational decision making
model presupposes that there is one
best outcome. However, the decision-model can be limited by the cognitive
abilities of the people making the decision. For instance; how good is their
memory and imagination. The criteria will be subjective and may be difficult to
compare. This model requires a great deal of time and a great deal of
information. A rational decision making model tend to negate the role of emotions in decision making. This is
where the status quo bias comes in and interferes the decision making process. This
is because when choosing among alternatives,
individuals display a bias towards sticking to the old or prefer that things stay the same, or that they
change as little as possible (Sherfin, 2008).
When approaching the studies on
decision making of which status quo bias is its part, there are three
approaches to consider as they were put forward by Baron (2008), which are
Normative, descriptive and Prescriptive models.
Descriptive model means how actually
people make decisions. The people`s decision making normally comes from the way
they think. Mostly the way people think and choose to think is normally
affected by their culture and the way they have been brought up.
Prescriptive Model is the model that
prescribe or stating how people ought to think. Prescriptive model may consist
of lists of useful heuristics (rule of thumb) which takes the form of words to
the wise, for example alcohol can be dangerous to your life and health, drink
responsibily if you can’t then quit drinking.or do unto others as you would
like other to do to you.
Normative model is the standard that defines thinking at its best
in achieving the thinkers goals. By using the normative model, 7 steps model of
making decisions can be put forward in the rational decision making process.
Baron(2008) said that prescriptive model
requires open minded thinking. To be able to make good decisions, it is
required that people are open minded and look at all matters of a case
before deciding which choice is the best for the decision
maker and his or her surroundings.
By using open minded thinking while
evaluating alternative and looking at the evidence concerning a case, one can get a broader and better perspective on
available options. Alternatives which may from the start seem like the best choice are not necessarily
always the best choice after having done
a careful evaluation. Thirdly is Normative model, which is the standard that
defines thinking which is best in achieving the thinkers goals. By using the
normative model,7 steps can be put
forward in the rational decision making model.
The model is
going to be placed in a status quo bias and see how an alcoholic person can
actually make a decision when he/she wants to quit his/
her ill behaviour.
Status quo bias is not a rational thinking, this is proved by the way 7
steps decision model seem not to be followed when need for weight allocation of
the criteria and selection of best alternative comes into focus.
Descriptive model, means how actually people
make decisions. The people`s decision making normally comes from the way they
think.Example is the person who is alcoholic, who may tend to think drinking much
alcohol is actually not bad afterall it is a way of socialising with friends
and peers.
In Normative model, the status quo
bias is described as an independence of
value and belief that is people who are making decisions basing on status quo
tend to adjust their beliefs according to what their mind desires.
The example of
relevance of applying status quo bias
into normative model is an Alcoholic Person.
STEP
ONE-Definition of Problem
The person is alcoholic.
STEP
TWO-Identifying decision criteria
The person with status quo bias who
is Alcoholic would want to leave and stop the habit since he knows it is a bad
habit, however he want to become the occasional drinker after a stressful day
or a part.
STEP
THREE-Allocate the weight.
The alcoholic plan to and try to
reform this habit of alcoholism, by saying that he/she wont drink completely.
STEP FOUR-Develop
the alternative.
The alternatives developed mostly have
to match with desired result of stopping alcoholism, he or she comes with the justification for
stopping drinking, stop going to the pub
and save money used for alcohol for the
meaningful purposes in life such as travelling and buying the house.
STEP
FIVE-Evaluation of alternatives.
Here the Alcoholic looks at different
views on pros and cons of alcoholism, and tend to focus on against excessive
alcohol drinking.
STEP SIX-Select the best alternative.
For a person with status quo bias to
stop taking alcohol is the rational choice and
will seem to maximize the utility.However this resolution can last for a
short while but due to peer pressure of old buddies whom he/she might contact
and whom he has not met for years might make him to rationalize violations by
making exceptions by starting being alcoholic again or by attending his half
birthday or attending cousins wedding anniversary.
STEP SEVEN- Evaluate the decision
After evaluating the
decision, he/she finds that the alcoholism habit has come back, however he/she
decides that he/she will not stop drinking alcohol completely, but he will be
an occasional drinker after all drinking helps him to meet the old friend and that
it is a way of socialising with the peers.
Pescriptive model which is how people
ought to think, on the case of alcoholic person suggest that he/she shun from
drinking as it is addictive and can rob one of his finances, family, health and
personal development such as travelling and building houses and other
investments.
The heuristic (rule of thumb) here could
be alcohol can be dangerous to your life
and health,drink responsibily if you can’t then quit drinking.
In order to
change an alcoholc habit, an alcoholic person is supposed to change friends and
company and choose another useful
activity in a society rather than going to the pub.
Conclusion
It is clear that Status Quo Bias does
not help rational decision making,
normally when choosing among alternatives, individuals display a bias towards
sticking to the old and not to display some characteristics that can advance
changes (Samuelson &
Zeckhauser, 1988).
However, the rational decision that allow changes can bring about the developmental
transformation that can make consciusness to balance and get controlled by
sciousness-the absence of ’I’
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