Rational Choice with Status Quo Bias

Abstract

Status quo bias refers to the psychological tendency of people to maintain existing decisions without making changes. This paper aims to explore the influence of status quo bias on regular financial management and consumption decisions based on existing literature and data and provides relevant suggestions to reduce the impact of Status quo bias. The study focuses on the influence of status quo bias on personal regular financial behavior and consumption choices and analyzes the causes of status quo bias and countermeasures. The result shows that status quo bias affects regular financial management and consumption decisions. People are more likely to stay where they are and ignore better options or opportunities. In regular financial management, they may be reluctant to change investment plans, and in consumption decisions, they prefer to consume now and ignore long-term planning. To cope with the negative impact of status quo bias, the author proposes some coping strategies, such as setting goals and providing information, setting up automated savings plans and using visual tools.