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Yusufcan Masatlioglu - One of the best experts on this subject based on the ideXlab platform.
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limited attention and Status Quo bias
Journal of Economic Theory, 2017Co-Authors: Mark Dean, Ozgur Kibris, Yusufcan MasatliogluAbstract:We introduce and axiomatically characterize a model of Status Quo bias in which the Status Quo affects choices by both imposing psychological constraints and focusing attention. The resulting Limited Attention Status Quo Bias model can explain both the findings that Status Quo bias is more prevalent in larger choice sets and that the introduction of a Status Quo can change choices between non-Status Quo alternatives. Existing models of Status Quo bias are inconsistent with the former finding while models of decision avoidance are inconsistent with the latter. We show that the interaction of the two effects has important economic implications, and report the results of laboratory experiments which show that both attention and psychological constraints are necessary to explain the impact of Status Quo on choice.
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limited attention and Status Quo bias
Research Papers in Economics, 2014Co-Authors: Mark Dean, Ozgur Kibris, Yusufcan MasatliogluAbstract:We introduce and axiomatically characterize a model of Status Quo bias in which the Status Quo affects choices by both changing preferences and focusing attention. The resulting Limited Attention Status Quo Bias model can explain both the finding that Status Quo bias is more prevalent in larger choice sets and that the introduction of a Status Quo can change choices between non-Status Quo alternatives. Existing models of Status Quo bias are inconsistent with the former finding while models of decision avoidance are inconsistent with the latter. We report the results of laboratory experiments which show that both attention and preference channels are necessary to explain the impact of Status Quo on choice.
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rational choice with Status Quo bias
Journal of Economic Theory, 2005Co-Authors: Yusufcan MasatliogluAbstract:Abstract Motivated by the empirical findings concerning the importance of one's current situation on her choice behavior, the main objective of this paper is to propose a rational choice theory that allows for the presence of a Status Quo bias, and that incorporates the standard choice theory as a special case. We follow a revealed preference approach, and obtain two nested models of rational choice that allow phenomena like the Status Quo bias and the endowment effect, and that are applicable in any choice situation to which the standard (static) choice model applies.
Antoine Loeper - One of the best experts on this subject based on the ideXlab platform.
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dynamic collective choice with endogenous Status Quo
Journal of Political Economy, 2016Co-Authors: Wioletta Dziuda, Antoine LoeperAbstract:We analyze a bargaining situation in which preferences evolve over time and the previous agreement becomes the next Status Quo. The endogeneity of the Status Quo exacerbates the players’ conflict of interest: Players disagree more often than under exogenous Status Quo. This leads to inefficiencies and Status Quo inertia. Under certain conditions, the negotiations can come to a complete gridlock: Players never reach an agreement. Gridlock can occur between players with arbitrarily similar preferences, provided they are sufficiently patient. In legislative settings, our model predicts polarization and explains why legislators may fail to react promptly to economic shocks.
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dynamic collective choice with endogenous Status Quo
Social Science Research Network, 2015Co-Authors: Wioletta Dziuda, Antoine LoeperAbstract:This paper analyzes an ongoing bargaining situation in which preferences evolve over time and the previous agreement becomes the next Status Quo, determining the payoffs until a new agreement is reached. We show that the endogeneity of the Status Quo induces perverse incentives that exacerbate the players' conflict of interest: Players disagree more often than they would if the Status Quo was exogenous. This leads to inefficiencies and Status Quo inertia. Under certain conditions, the endogenous Status Quo leads the negotiations to a complete gridlock in which players never reach an agreement. Such gridlock can occur between players with arbitrarily similar preferences, provided they are sufficiently patient. When applied to the legislative setting, our model predicts polarized behavior, and explains why oftentimes legislators fail to react in a timely fashion to economic shocks.
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dynamic collective choice with endogenous Status Quo
Research Papers in Economics, 2010Co-Authors: Wioletta Dziuda, Antoine LoeperAbstract:This paper analyzes an ongoing bargaining situation in which i) preferences evolve overtime, ii) the interests of individuals are not perfectly aligned, and iii) the previous agreement becomes the next Status Quo and determines the payoffs until a new agreement is reached. We show that the endogeneity of the Status Quo exacerbates the players’ conflict of interest and decreases the responsiveness of the bargaining outcome to the environment. Players with arbitrarily similar preferences can behave as if their interests were highly discordant. When players become very patient, the endogeneity of the Status Quo can bring the negotiations to a complete gridlock. Under mild regularity conditions, fixing the Status Quo throughout the game via an automatic sunset provision improves welfare. The detrimental effect of the endogeneity of the Status Quo can also be mitigated by concentrating decision rights, for instance, by lowering the supermajority requirement.
Wioletta Dziuda - One of the best experts on this subject based on the ideXlab platform.
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dynamic collective choice with endogenous Status Quo
Journal of Political Economy, 2016Co-Authors: Wioletta Dziuda, Antoine LoeperAbstract:We analyze a bargaining situation in which preferences evolve over time and the previous agreement becomes the next Status Quo. The endogeneity of the Status Quo exacerbates the players’ conflict of interest: Players disagree more often than under exogenous Status Quo. This leads to inefficiencies and Status Quo inertia. Under certain conditions, the negotiations can come to a complete gridlock: Players never reach an agreement. Gridlock can occur between players with arbitrarily similar preferences, provided they are sufficiently patient. In legislative settings, our model predicts polarization and explains why legislators may fail to react promptly to economic shocks.
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dynamic collective choice with endogenous Status Quo
Social Science Research Network, 2015Co-Authors: Wioletta Dziuda, Antoine LoeperAbstract:This paper analyzes an ongoing bargaining situation in which preferences evolve over time and the previous agreement becomes the next Status Quo, determining the payoffs until a new agreement is reached. We show that the endogeneity of the Status Quo induces perverse incentives that exacerbate the players' conflict of interest: Players disagree more often than they would if the Status Quo was exogenous. This leads to inefficiencies and Status Quo inertia. Under certain conditions, the endogenous Status Quo leads the negotiations to a complete gridlock in which players never reach an agreement. Such gridlock can occur between players with arbitrarily similar preferences, provided they are sufficiently patient. When applied to the legislative setting, our model predicts polarized behavior, and explains why oftentimes legislators fail to react in a timely fashion to economic shocks.
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dynamic collective choice with endogenous Status Quo
Research Papers in Economics, 2010Co-Authors: Wioletta Dziuda, Antoine LoeperAbstract:This paper analyzes an ongoing bargaining situation in which i) preferences evolve overtime, ii) the interests of individuals are not perfectly aligned, and iii) the previous agreement becomes the next Status Quo and determines the payoffs until a new agreement is reached. We show that the endogeneity of the Status Quo exacerbates the players’ conflict of interest and decreases the responsiveness of the bargaining outcome to the environment. Players with arbitrarily similar preferences can behave as if their interests were highly discordant. When players become very patient, the endogeneity of the Status Quo can bring the negotiations to a complete gridlock. Under mild regularity conditions, fixing the Status Quo throughout the game via an automatic sunset provision improves welfare. The detrimental effect of the endogeneity of the Status Quo can also be mitigated by concentrating decision rights, for instance, by lowering the supermajority requirement.
Nicole Alice Sindzingre - One of the best experts on this subject based on the ideXlab platform.
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The Ambivalent Impact of Commodities: Structural Change or Status Quo in Sub-Saharan Africa?
South African Journal of International Affairs, 2013Co-Authors: Nicole Alice SindzingreAbstract:Sub-Saharan African economies have been exposed to major global changes, in particular a long cycle of increase in commodity prices since the early-2000s, the growth of emerging countries, which are key drivers of high commodity prices and have become significant trade and investment partners, and since 2008, recession in their traditional export markets. These changes may generate structural transformation, hence requiring a reconceptualisation of the integration of Sub-Saharan Africa into the world economy. China is a major trade partner and investor in commodities, industrial sectors and infrastructures in Sub-Saharan Africa. Will this trade and investment pattern preserve the Status Quo and entrenchment of market and export structures characterised by the pre-eminence of commodities? Or, in improving governments' fiscal space, will it foster opportunities for structural change? It is argued that it is the presence of 'developmental' political economies that, in the end, creates opportunities for diversification, industrialisation and structural transformation.
Mark Dean - One of the best experts on this subject based on the ideXlab platform.
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limited attention and Status Quo bias
Journal of Economic Theory, 2017Co-Authors: Mark Dean, Ozgur Kibris, Yusufcan MasatliogluAbstract:We introduce and axiomatically characterize a model of Status Quo bias in which the Status Quo affects choices by both imposing psychological constraints and focusing attention. The resulting Limited Attention Status Quo Bias model can explain both the findings that Status Quo bias is more prevalent in larger choice sets and that the introduction of a Status Quo can change choices between non-Status Quo alternatives. Existing models of Status Quo bias are inconsistent with the former finding while models of decision avoidance are inconsistent with the latter. We show that the interaction of the two effects has important economic implications, and report the results of laboratory experiments which show that both attention and psychological constraints are necessary to explain the impact of Status Quo on choice.
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limited attention and Status Quo bias
Research Papers in Economics, 2014Co-Authors: Mark Dean, Ozgur Kibris, Yusufcan MasatliogluAbstract:We introduce and axiomatically characterize a model of Status Quo bias in which the Status Quo affects choices by both changing preferences and focusing attention. The resulting Limited Attention Status Quo Bias model can explain both the finding that Status Quo bias is more prevalent in larger choice sets and that the introduction of a Status Quo can change choices between non-Status Quo alternatives. Existing models of Status Quo bias are inconsistent with the former finding while models of decision avoidance are inconsistent with the latter. We report the results of laboratory experiments which show that both attention and preference channels are necessary to explain the impact of Status Quo on choice.
