Regarding the "status quo bias" example with the utility company, I think it's fallacious, or at least misleading. For realistic typical humans with all their intellectual limitations, it is rational to favor the status quo when someone offers to change a deal that has so far worked tolerably well in ways that, for all you know, could have all sorts of unintended consequences. (And not to mention the swindles that might be hiding in the fine print.)
Moreover, if the utility company had actually started selling different deals rather than just conducting a survey about hypotheticals, it's not like typical folks would have stubbornly held to unfavorable deals for years. What happens in such situations is that a clever minority figures out that the new deal is indeed more favorable and switches -- and word about their good experience quickly spreads and soon becomes conventional wisdom, which everyone else then follows.
This is how human society works normally -- what you call "status quo bias" is a highly beneficial heuristic that prevents people from ruining their lives. It makes them stick to what's worked well so far instead of embarking on attractive-looking, but potentially dangerous innovations. When this mechanism breaks down, all kinds of collective madness can follow (speculative bubbles and Ponzi schemes being the prime examples). Generally, it is completely rational to favor a tolerably good status quo even if some calculation tells you that an unconventional change might be beneficial, unless you're very confident in your competence to do that calculation, or you know of other people's experiences that have confirmed it.
Subscribe to RSS Feed
= f037147d6e6c911a85753b9abdedda8d)
That is also a very good point against the utility company example.
I think I'll remove it, unless somebody persuasively argues in its favor in a few hours or so.
Some things that look like biases are not so much, when looked at from a situational perspective. Taleb quotes the example of hyperbolic discounting (HD).
In HD people apply a much higher discount rate between e.g., today and tomorrow than bettween one year from not and one year and one day from now. Taleb argues that this can be rational if the person may now pay up at all i.e., credit risk. A person is much more likely to pay up now than tomorrow, because they are here today, but tomorrow they could be spending the money in Rio. In contrast the difference in credit risk between 365 and 366 days is negligible.