Question

Cognitive biases including escalation of commitment, confirmation bias, and status quo bias. Choose one of these and explain how it leads to resistance to change. Please provide an example.

Answer 1

Status Quo bias theory is an emotional bias and preference to stay with the current state of affairs. Status quo bias theory was initiated by Samuelson and Zeckhauser to explain why people have resistance and reject technology. The people will like to stick with the existing way of doing things. The people will prefer things to stay the same way by doing nothing. The people prefer safe and reliant choices and are not open to new way of doing things. Status quo bias will result in frequently making irrational decisions and sticking to choices that worked in the past and are considered safe and reliant.

A status quo bias makes you chose safe options and misses any new opportunities, which outweigh the risk. The status quo bias is primarily due to the following reasons:

1. Loss aversion bias: The people focus more on what they stand to lose rather than analyze how they might benefit from initiating change in the systems.
2. Exposure: There is a tendency to stick to familiar patterns and a usual way of doing things. Some decisions were preferred because they were familiar.

The status quo bias has a big impact on the way things are done and people's inability to accept change. For example, people will prefer a safe, method of investing their money rather than opt for a riskier method which might give them better returns. For example, saving/fixed bank account giving nominal interest would be preferred to a mutual fund investment giving 12%-15% returns because the risk is more and saving/fixed bank account is a familiar way of investing. A person may prefer to order the same food options from a menu rather than explore and experiment with new food choices. Similarly in politics, people will vote for a party and person they have known for long rather than opt for a person with more radical viewpoints. The people prefer familiarity and are risk-averse which makes them prefer the status quo rather than opt for change.