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Journal articles (2019), Journal of Economic Theory, 181, pp. 289-308

Rational status quo

Gilboa Itzhak, WANG Fan

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. Link to the article

GILBOA, I. and WANG, F. (2019). Rational status quo. Journal of Economic Theory, 181, pp. 289-308.

Keywords : #Case, #based-decisionsStatus-quoSystem-1System-2Inertia