A Study of Psychological Mechanisms and Relevant Application Research of Status Quo Bias

Abstract

This paper introduces a phenomenon in which individuals are unwilling to change their current state after period of directed choices. We call it status quo bias. Status quo bias is an influential theory in behavioral economics, where people's reluctance to risk common sense in the face of unknown choices is explained by a combination of loss aversion and regret theory, causing the choices to look better than its alternatives. We choose to utilize examples of Coca-Cola company and European organ donation as the basis of our study to concentrate on the deeper influence of status quo bias on some degree of significance to the individuals or companies concerned who are affected by it as the study method. Meanwhile, the reason we choose to study this topic is that it is a classic and important basic theory in behavioral economics, and it has an unshakable position in the current industrial structure and economic development environment of most enterprises, and it is also widely use in daily life. We also analyze the pros and cons in terms of losses and gains, and we demonstrate through examples that gains do outweigh losses when following the status quo bias. From the application of this paper, we can conclude the following points: the study of the theory of status quo bias can help us better understand the behavior of micro-actors in the market and improve the theories about consumer behavior and other related areas in the direction of economics; decision makers can respond to people's tendency of status quo bias in practical areas such as marketing industry, administrative fields or public policies and so on. To sum up, it is significant to grasp well in both the comprehension and interpretation of everyday decision-making behavior of status quo and its application in various practice areas.