Consumer rationality and the status quo

Raymond S. HARTMAN, Michael J. DOANE, Chi Keung WOO

Research output: Contribution to journalArticlespeer-review

Abstract

Received microeconomic theory presumes rational consumers maximize utility over all commodity bundles. Recent analysis, however, suggests that a consumer's status quo may limit economic rationality, "bias" consumer decisions, and induce serious errors in survey-based valuations of public and private goods. Using regression and choice-theoretic frameworks, we investigate the existence of status quo effects in the consumer valuation of a particular unpriced product--the reliability of residential electrical service. Such valuations have become important in electric utility resource planning and rate making. We find substantial status quo effects, which must be addressed in welfare comparisons regarding electric service reliability. Copyright © 1991 Oxford University Press.
Original languageEnglish
Pages (from-to)141-162
JournalThe Quarterly Journal of Economics
Volume106
Issue number1
DOIs
Publication statusPublished - Feb 1991

Citation

Hartman, R. S., Doane, M. J., & Woo, C.-K. (1991). Consumer rationality and the status quo. The Quarterly Journal of Economics, 106(1), 141-162. doi: 10.2307/2937910

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