Status Quo Bias: Common misperception of the mind and why it matters

Did you ever wonder, why, despite all the rational arguments pointing towards your product, people still stick with the objectively worse competitor? Why are innovation processes so slow and why do people love the sentence "But we always did it that way" so much? As you are reading this, I assume you have.

A reason for this behavior is a mental shortcut our brains use, which is called the status quo bias. Basically, it means that people do not like change. The more scientific definition of the status quo bias is the following:

The status quo bias is the tendency, to prefer the current situation or to do nothing, although another option would be more beneficial and leads to resistance towards change. (Samuelson & Zeckhauser, 1988; Burmeister & Schade, 2007).

It is one of the most common shortcuts people take and it's really hard to break. The status quo bias represents poor decision-making that might induce individuals to forego beneficial outcomes, or even harm themselves. Past research puts the reasons for this in three categories: rational decision making, cognitive misperception, and psychological commitment.

Let's look at the first one: There are very rational explanations to choose what we have chosen before.

Rational decision making

For example when we make independent but identical consecutive decisions. The preferences did not change over time. Making the same decision over similar outcomes, even though the two scenarios are completely independent, would represent rational decision making. Our brain is lazy. So once we find what we like, we should not have to go through the struggle again to analyze everything all over again. We are good at replicating past decisions. Second high transition, information and searching costs are more rational explanations. Changing is less attractive than the option itself might suggest because getting there is way too expensive or cumbersome. Lastly, uncertainty in the decision-making setting serves as a rational explanation. Thereby, the status quo inertia is caused by uncertainty about the payoff from switching. Consequently, opting for what we choose before is perceived as rational replication of past behavior and a logical option.

So in the situations above, we can say a big thank you to the machine in our heads and honor our brain. But obviously, it is not always rational to stick to what you have or do nothing. Let's take a look at the flip side: Cognitive misperception and psychological factors.

Cognitive misperception

Cognitive misperception describes the asymmetric position the status quo holds in the mind, when making the decision. It basically means that we automatically value the status quo more, just because it is what we have chosen before. And here is why:

• Loss aversion: According to prospect theory from Kahneman and Tversky, people make reference-dependent judgements and value losses stronger than gains. The status quo option is likely to serve as this reference point and everything that downgrades the decision maker from this position is a loss. Due to loss aversion, we tend to look more at the potential losses than the possible gains. This means that although two options A and B, from which none of the options objectively is better to the other, the option that takes the status quo position is still preferred due to loss aversion.

• Risk aversion: At the same time, people tend to be risk averse when facing gains and risk seeking when facing losses. Adversity towards risk and uncertainty favors the status quo bias. Simultaneously, the existence of a status quo option increases the aversion towards uncertainty. What is familiar to us decreases the perception of ambiguity, risk, and uncertainty.

• Decision regret: Additionally, people try to avoid decision regret, which is that negative feeling we get subsequently to a bad outcome from a choice we have made. People anticipate how a decision outcome would make them feel afterwards, to avoid that. People are found to anticipate higher post-decisional regret for bad outcomes, if these outcomes result from the action and less if they result from inaction.

• Emotional salience: The status quo option can be considered as inertia and is therefore considered to evoke a smaller emotional response than change. It is preferred as people obviously prefer to feel nothing negative, especially when it is within their power to avoid it by a simple decision.

• Cognitive rigidity describes the low level of active search for new information and novelties in daily life, which goes hand in hand with the sticking with habits. Everyday life confronts people with an overflow of information. As the brain capacity of humans is limited, people do not always consider all the factors available. For example, people might rely heavily on decisions made in the past instead of analyzing all information available.

• Limited attention towards all the options available has been found to be a strong contributor to the status quo bias. The more limited the attention is, the fewer options will be considered. Besides requiring a deviation from habits, change is often not considered because it seems to be the less available and salient option.

• Social norm: Furthermore, the status quo option serves as some sort of norm. Limited attention concentrates the focus on alternatives that represent the “normal solution” and decreases outside-of-the-box thinking. This goes hand in hand with the finding that the status quo bias is associated with a lack of imagination. According to this finding, people rather attempt to improve current solutions than to pursue real change.

Psychological factors

Psychological factors summarize how people deviate from the idea of the homo oeconomicus, the rational choice model. Summarizing this very unscientifically, the rational choice model basically assumes that we are all machines, whose only goal is to maximize benefit based on clear preferences, that do not change. If you want to read more quotable content about, feel free to reach out. I am happy to share. But for now let’s take a look at how we are not rational:

• Commitment: Psychological factors might increase the perception of commitment towards past decisions. People attempt to justify previous decisions for themselves by committing even stronger to them.

• Avoiding cognitive dissonance: In general, people are looking for consistency. Cognitive dissonance, in which individuals hold two contradicting ideas or beliefs at the same time, is attempted to be avoided. The reevaluation of a past decision could indicate contradicting beliefs over the decision made and over oneself. If one alternative was the best in the past, reconsidering all the options could conflict with self-perception.

• Fear of losing control: about future outcomes when switching between options. The status quo bears the illusion of control and knowledge. Glass and Singer (1972) find that a situation that seems to be more controllable and predictable, reduces uncertainty, is perceived as less stressful. Change can be a strenuous situation many people have difficulties coping with. Sticking to routines and the status quo can put people at ease. In many cases, the status quo option is perceived as a safe alternative. It bears the illusion of control, increasing its attractiveness.

Closing remarks

In recent studies, a connection between the status quo bias and innovation resistance has been drawn. The status quo bias hinders change and therefore innovation. The psychological stress triggered by change and new situations induce people to shut down a transformation process. The adoption of an innovation, may it be new software or a new product, might be prevented by the status quo bias. It is on us to understand that behavior, discover ways to break the habit of choosing the same over and over again, and make change more attractive. As can be seen, rational argumentation and quantitative proof are not enough.