conservatism bias vs. status quo bias

CFA Level III Portfolio Management
#1

I personally found these two biases extremely hard to distinguish, or at least in many situations I can explain with either bias.

I understand these two are from two different categories (cognitive errors and emontional bias). Accoring to Schweser, Conservatism bias occurs when “market participatns rationally form an initial view but fail to change that view as new info becomes available”. Status quo bias is “when comfort with the existing situation leads to an unwillingness to make changes”. It also makes sense to me to say status quo bias occurs because the unwillingnesss to make change is due to the fact that “market participatns rationally form an initial view but fail to change that view as new info becomes available” (i.e. conservatism bias).

Thanks for any help.

#2

info being available, being unwilling to make change = conservatism.

unwilling to change, period, info or no info = status quo.

also conservatism is “an information processing bias”.

Status quo is an emotional bias.

#3

I don’t agree with cpk123. ‘Unwillingness’ refers to emotional bias.

Conservatism: New info, inability to make changes (for example: understand new info inappropirately), no matter he’s willing or unwilling to change.

Status quo bias: New info, unwilling to change.

I personally find hard to distiunguish conservatism and anchoring and adjustment bias.

Hope it hepls.

#4

Conservatism: Belief Perseverance; Initial information is maintained.

Status Quo: Emontional Bias

#5

Conservatism is a cognitive error: essentially, when new information arrives that contradicts the old infomation on which the decision was based, the person perceives the new information as a surprise or anomaly, rather than an indication that conditions have changed.