Ambiguity Seeking as a Result of the Status Quo Bias

• Authors: Mercè Roca and A. John Maule.
• BSE Working Paper: 114 | September 15
• Keywords: uncertainty , ambiguity , risk , status quo bias , decision making
• JEL codes: C91, D81
• uncertainty
• ambiguity
• risk
• status quo bias
• decision making

Several factors affect attitudes toward ambiguity. What happens, however, when people are asked to exchange an ambiguous alternative in their possession for an unambiguous one? We present three experiments in which individuals preferred to retain the former. This status quo bias emerged both within- and between-subjects, with and without incentives, with different outcome distributions, and with endowments determined by both the experimenter and the participants themselves. Findings emphasize the need to account for the frames of reference under which evaluations of probabilistic information take place as well as modifications that should be incorporated into descriptive models of decision making.