Rational status quo

Itzhak Gilboa, Fan Wang*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

Decision makers often stick to a status quo without explicitly reconsidering it. Yet, their observed choices might be compatible with a fully rational model. We ask when such a rationalization is possible. We assume as observable only the choice of sticking to the status quo vs. changing it, as a function of a database of cases. We state conditions on the set of databases that would make the decision maker change the status quo, which are equivalent to the following representation: the decision maker entertains a set of theories, of which one is that her current choice is the best; she is inert as long as that theory beats any alternative theory according to a maximum likelihood criterion.

Original languageEnglish
Pages (from-to)289-308
Number of pages20
JournalJournal of Economic Theory
Volume181
DOIs
StatePublished - May 2019

Funding

FundersFunder number
ANR-11-IDEX-0003ANR-11-LABX-0047
AXA Chair
Sapir Center for Research in Economics
Iowa Science Foundation
AXA Research Fund
Israel Science Foundation1077/17, 704/15

    Keywords

    • Case-based decisions
    • Inertia
    • Status quo
    • System 1
    • System 2

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