ECON 2023 Lecture Notes - Lecture 19: Status Quo Bias, Dynamic Inconsistency, Brand Loyalty
7 Dec 2016
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Document Summary
Tendency people have to favor any option presented as being default (status quo) option. Less likely to check off the box (oppose default option: e. g. ) When donate is default option > higher % of donation. In novel situation, no preexisting preference for options. > way options are framed= large effect. Stick w. default option to avoid possibility of incurring loss. Feeling of potential loss: brand loyalty. Used to purchase one brand > reluctant to purchase other brands. Myopia & time inconsistency: long-run planning, trade off btw present & future. Fact that brains have hard time conceptualizing future. Future= fuzzy, out of focus, hard to see (compared to present) Future blind conceptualize future costs & future bene ts. > dif culty evaluating possibilities in future: consequences, prefer quick/ immediate outcomes. Irrational decision making for quick bene ts v. bene ts for long time period. Hard to imagine additional bene ts yielding in future.
