Status quo bias and the number of alternatives: An empirical illustration from the mutual fund industry
AbstractWe examine the extent of the Status Quo Bias (SQB) in a real-world repeated decision situation. Individuals who are subject to a SQB tend to choose an alternative that was chosen previously (i.e. their status quo), even if it is not the optimal choice any more. We examine the US equity mutual fund market and find strong evidence for the existence of a SQB in this market. Furthermore, the SQB is more severe in segments where there are more funds to choose from. Thereby, we deliver the first empirical confirmation of the experimental result of Samuelson and Zeckhauser (1988), that the SQB positively depends on the number of alternatives. --
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Bibliographic InfoPaper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 05-07.
Date of creation: 2005
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More information through EDIRC
Status Quo Bias; Mutual Funds; Number of Alternatives; Performance Flow Relationship;
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
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