Status quo bias and the number of alternatives: An empirical illustration from the mutual fund industry
We 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.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: 0221 / 470 5607|
Phone: 0221 / 470 5607
Fax: 0221 / 470 5179
Web page: http://cfr-cologne.de/english/version06/html/home.php
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
- Harless, David W. & Peterson, Steven P., 1998. "Investor behavior and the persistence of poorly-performing mutual funds," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 257-276, November.
- Diane Del Guercio & Paula A. Tkac, 2001.
"Star power: the effect of Morningstar ratings on mutual fund flows,"
FRB Atlanta Working Paper
2001-15, Federal Reserve Bank of Atlanta.
- Guercio, Diane Del & Tkac, Paula A., 2008. "Star Power: The Effect of Monrningstar Ratings on Mutual Fund Flow," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 43(04), pages 907-936, December.
- Alexander Kempf & Stefan Ruenzi, 2004. "Family Matters: The Performance Flow Relationship in the Mutual Fund Industry," Finance 0404012, EconWPA, revised 26 May 2004.
- Daniel Bergstresser & James Poterba, 2000.
"Do After-Tax Returns Affect Mutual Fund Inflows?,"
NBER Working Papers
7595, National Bureau of Economic Research, Inc.
- Chevalier, J. & Ellison, G., 1996.
"Risk Taking by Mutual Funds as a Response to Incentives,"
96-3, Massachusetts Institute of Technology (MIT), Department of Economics.
- Chevalier, Judith & Ellison, Glenn, 1997. "Risk Taking by Mutual Funds as a Response to Incentives," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1167-1200, December.
- Judith A. Chevalier & Glenn D. Ellison, 1995. "Risk Taking by Mutual Funds as a Response to Incentives," NBER Working Papers 5234, National Bureau of Economic Research, Inc.
- Carhart, Mark M, 1997. " On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
- Woerheide, Walt, 1982. "Investor Response to Suggested Criteria for the Selection of Mutual Funds," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 17(01), pages 129-137, March.
When requesting a correction, please mention this item's handle: RePEc:zbw:cfrwps:0507. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.