Different sources define this differently. Is status quo bias sticking to your original forecast, or is it relying too heavily on recent information?
sticking…
Status quo is inertia. Laziness. Investor wont care to even look at the information. This is emotional bias, no information processing, no forecasting, no memorizing, no probability calculation and no cognitive errors.
status quo - has nothing to do with information / forecasts… Remember it is an emotional bias.
Information / forecasts start to creep in with Cognitive biases.
Information - sticking to old - is Conservatism. (Belief perseverance)
Information - updating based on new - is Representativeness (Sample size neglect/Base rate neglect). (Belief perseverance)
Another aspect to distinguish between Conservatism (belief pers) and Anchoring and Adjustment (Information processing) - In Anchoring and adjustment - you have new information about a company that its sales are going to be bad in the coming year/patent has not been approved / will be hurt by exports (things that tell you it is going down) - but past earning was 20$/share – you do not adjust that down.
how about in terms of defined contribtions when an investor sets his allocations and just leaves it?
thats status quo as well
that is true frankz888.
Another question: status quo trap (eco) is leaving variables as they are because of the past e.g 3% inflation, right? …i hate all these definitions and same wording in different chapters. Same for completion portfolio vs completion fund.
what type of bias is presented when someone refuses to sell a losing position in hopes it will bounce back?
regret aversion
Should be gambler’s fallacy which is related to loss aversion
disposition effect - loss aversion
From CFAI:
Loss aversion leads people to hold their losers even if an investment has little or no chance of going back up
Regret aversion can cause FMPs to hold onto positions too long. They are reluctant to sell because they fear that the position will increase in value and then they will regret having sold it.
I love BF!
i think we need more context like a statement “i really don’t like to lose” or “i feel i could regret this or that” in order to pick the right one…
Status quo bias and status quo trap look different? It seems only Asset Allocation is consistent across study sessions. Others are kind of “segmented”.