Why Does Doing Nothing Feel Safer than Changing?

Your team's supplier delivers late about one order in five, and everyone has a workaround for it. A second supplier has quoted better terms and a shorter lead time. The contract renews on the first of the month unless someone cancels it, and for the third consecutive year nobody has.

Doing nothing feels safer because the current arrangement is the reference point, so a change's losses weigh more than its gains (Kahneman, Knetsch and Thaler, 1991), because a default is chosen more often than the same option requiring action (Johnson and Goldstein, 2003), and because harm after acting is regretted more than equal harm after inaction (Kahneman and Tversky, 1982).

What Is Status Quo Bias?

In William Samuelson and Richard Zeckhauser's questionnaires, a person inheriting money chose among investments, either with no history or with one investment described as already held, and an option became substantially more popular once it was the one already held, a pattern the authors called status quo bias (Samuelson and Zeckhauser, 1988), and they found the same pull in Harvard's health-plan records, set out in Why Is Change at Work So Hard?.

When New Jersey and Pennsylvania both offered drivers a choice between a cheaper policy with a limited right to sue and a more expensive policy with a full right to sue, New Jersey made the limited policy the default and Pennsylvania made the full policy the default. In New Jersey 83 percent of drivers kept the default, and in a questionnaire experiment 23 percent of people given the New Jersey framing bought the full right to sue against 53 percent given the Pennsylvania framing (Kahneman, Knetsch and Thaler, 1991). In a survey of electricity customers offered combinations of reliability and price, 60.2 percent of the customers who already had high-reliability service ranked their own current service first (Kahneman, Knetsch and Thaler, 1991). In the supplier contract the current supplier is the option already held, and the comparison runs from it.

Why Does the Default Win Even When Nobody Chose It?

A default is the option that takes effect if nobody acts. Eric Johnson and Daniel Goldstein compared European countries whose organ-donation rules required people to register as donors with countries that counted everyone as a donor unless they opted out. In the first group the share of people on the register ran from 4.25 percent in Denmark to 27.5 percent in the Netherlands; in the second, the share who had not opted out ran from 85.9 percent in Sweden to above 99 percent in Austria, France, Hungary, Poland and Portugal (Johnson and Goldstein, 2003). Those are registry figures; the paper's regression on actual donations found rates about 16 percent higher in the presumed-consent countries. In the same paper's online experiment with 161 people, 42 percent consented when the form required opting in, 82 percent when it required opting out, and 79 percent when it had no default.

In retirement savings, Brigitte Madrian and Dennis Shea studied one large company that began enrolling new hires in its 401(k) plan automatically, at a 3 percent contribution rate in a money-market fund, unless they opted out. Among employees with 3 to 15 months of tenure, participation was 37 percent for those hired before the change and 86 percent for those hired after it, and 61 percent of the automatically enrolled employees had kept both defaults (Madrian and Shea, 2001).

What Makes Automatic Renewal a Default?

A contract that renews unless someone cancels it is a default of this kind. Staying with the supplier requires nothing, and switching requires a decision, a cancellation, and a signature. In Johnson and Goldstein's experiment the opt-out condition did not differ from the condition with no default, so the gap was produced by the opt-in condition, the one in which becoming a donor required an action (Johnson and Goldstein, 2003). Rejecting a default took more effort as the judgment got harder in an imaging study (Fleming, Thomas and Dolan, 2010), and stress weakens the prefrontal functions that a deliberate switch requires (Arnsten, 2009), as Why Do I Make Worse Decisions When I'm Stressed? describes.

Why Do the Losses of Switching Weigh More than the Gains?

Daniel Kahneman, Jack Knetsch and Richard Thaler argue that status quo bias and the endowment effect are two appearances of one asymmetry, loss aversion, in which "the disutility of giving up an object is greater than the utility associated with acquiring it" (Kahneman, Knetsch and Thaler, 1991). The asymmetry appears in choices under risk (Kahneman and Tversky, 1979). In the supplier decision, the familiar terms, the known contact, and the working workaround count as losses in the comparison, and the shorter lead time counts as a gain, the weighting behind why losing hurts more than winning feels good.

Why Does the Current Option Feel like Ours?

The same authors ran markets in which half the people in a room were given a coffee mug and half were not, and then asked owners for the lowest price at which they would sell and non-owners for the highest price they would pay. Median selling prices were more than twice median buying prices, and the number of trades averaged about a third of what a market with no ownership effect would produce; markets in tokens with assigned values traded at the predicted volume, so transaction costs did not explain the gap (Kahneman, Knetsch and Thaler, 1990). In the supplier decision, the current contract takes the place of the owned object. The team values the arrangement it holds above the price at which it would have chosen it, which is why we overvalue things that are ours.

Why Does One Known Problem Outweigh Several Improvements?

Paul Rozin and Edward Royzman reviewed evidence across learning, attention, impression formation and moral judgment and described a general bias to give greater weight to negative entities, in which a negative event is stronger than the equivalent positive one (Rozin and Royzman, 2001). The review lists negative potency as one of four forms of the bias, and it is the form that applies to a comparison of two suppliers. One report of a problem with the new supplier weighs more than several reports of improvements, the weighting behind why one piece of criticism outweighs ten compliments, and the late deliveries of the current supplier are already handled by the workaround.

Why Does the Familiar Feel Safe?

Across 208 experiments, people liked a stimulus more the more often they had seen it, with nothing but the exposure count changing (Bornstein, 1989). Three years of orders, invoices, and calls with the current supplier are three years of exposures, and the second supplier has been encountered at one meeting and in one quote, the gap behind why something feels safer because it is familiar.

Why Do Unknown Odds Feel Worse than Known Odds?

The current supplier's failure rate is known, about one order in five. The second supplier's is unknown. In a thought experiment that Daniel Ellsberg put to colleagues, people could bet on drawing a red ball from an urn holding 50 red and 50 black balls or from an urn holding 100 red and black balls in an unknown proportion, and most preferred the urn whose odds they knew, even though nothing made the unknown urn worse (Ellsberg, 1961). The preference was recorded by informal questioning, and the imaging work that followed found ambiguous gambles engaging the amygdala and orbitofrontal cortex more than gambles with known odds (Hsu, Bhatt, Adolphs, Tranel and Camerer, 2005). A known one-in-five failure rate corresponds to the known urn, which is why teams choose a known problem over an unknown fix.

Why Does Acting Feel Riskier than Not Acting?

Ilana Ritov and Jonathan Baron asked people whether they would vaccinate a hypothetical child against a disease that kills 10 children in 10,000, when the vaccine itself could cause death. People were reluctant to vaccinate even when the vaccine's death rate was far lower than the disease's, and 23 percent of one student sample would accept no vaccine risk at all (Ritov and Baron, 1990). The pattern, a preference for harm that follows inaction over equal or smaller harm that follows action, was named omission bias a year later (Spranca, Minsk and Baron, 1991).

Kahneman and Tversky described two investors who lost the same amount, one by switching stocks and one by considering a switch and not making it, and respondents judged the one who acted to feel the greater regret (Kahneman and Tversky, 1982). Samuelson and Zeckhauser list regret avoidance among the psychological commitments behind status quo bias and write that it "favors adherence to status quo norms or routine behavior at the expense of innovation" (Samuelson and Zeckhauser, 1988). In the supplier decision, the person who signs the switch would be judged to regret a failure under the new supplier more than anyone regrets a failure under the old one, and a failure that follows a signature also puts the signer's standing in question, the trigger described in What Does Fight or Flight Mean at Work?.

Why Do Sunk Costs Count in the Renewal Decision?

Hal Arkes and Catherine Blumer sold season tickets to a university theater at full price or at one of two discounts, assigned at random, and found that full-price buyers attended more of the first five plays, 4.11 on average against 3.32 and 3.29, with no difference in the second half of the season (Arkes and Blumer, 1985). In a separate questionnaire experiment, 85 percent of people chose to finish a plane that was 90 percent completed after $10 million had been spent, although a competitor's plane was faster and cheaper, against 17 percent when the same choice was presented without the money already spent. Three years of onboarding, integration, and learned workarounds with the current supplier are sunk costs, and they count in the renewal decision although none of them can be recovered by renewing, which is why we keep funding projects that are not working.

Why Do People Defend What They Helped Build?

Michael Norton, Daniel Mochon and Dan Ariely had people assemble a storage box, fold origami, or build with Lego, and then bid for their own creations and for identical or expert-made ones. Builders valued their own amateur work about as highly as experts' work, the effect held for people who described themselves as do-it-yourself enthusiasts and for people who did not, and it disappeared when a creation was destroyed or left unfinished (Norton, Mochon and Ariely, 2012). The stakes in those studies were cents. At work, the person who negotiated the current contract and built the workaround spreadsheet has assembled something, and a proposal to switch is a proposal to discard it, which is why people defend what they helped build.

Why Doesn't Better Data Settle It?

Raymond Nickerson's review defines confirmation bias as "the seeking or interpreting of evidence in ways that are partial to existing beliefs, expectations, or a hypothesis in hand" (Nickerson, 1998). The delivery data, read by someone committed to the current supplier, becomes a list of reasons the late orders were exceptions. The popular extension of this finding, that correcting a false belief makes people hold it more strongly, was not found when Thomas Wood and Ethan Porter tested corrections on 52 issues with more than 10,100 participants; corrections moved average accuracy toward the facts on about nine issues in ten, and no correction produced the reverse (Wood and Porter, 2019). So data does move beliefs, and the delivery figures are worth presenting, and the reference point and the weightings above remain after the data is accepted, which is why better data doesn't change anyone's mind about a decision like this one.

Why Does the First Number Set the Comparison?

Amos Tversky and Daniel Kahneman spun a wheel of fortune in front of people to produce a number, 10 or 65, and then asked them to estimate the percentage of African countries in the United Nations. The groups given 10 and 65 gave median estimates of 25 and 45, and payment for accuracy did not reduce the effect (Tversky and Kahneman, 1974). Samuelson and Zeckhauser list anchoring with loss aversion among the cognitive misperceptions behind status quo bias (Samuelson and Zeckhauser, 1988). The current contract's price is the anchor for the new quote, and the current lead time is the anchor for the new one, which is why the first number sticks in everyone's head.

Is Doing Nothing Ever the Safer Choice?

Sometimes. Samuelson and Zeckhauser's own taxonomy puts rational decision making first. Where a switch has transition costs or the alternative is uncertain, keeping the current option can be the correct choice, and the bias is the part of the pull that remains after those costs are counted; their questionnaire results were a bias because neither cost was present (Samuelson and Zeckhauser, 1988). Thomas Gilovich and Victoria Medvec found that actions produce more regret in the short term and inactions produce more regret in the long run (Gilovich and Medvec, 1995), so the renewal that feels safe this month is the kind of inaction their research found people regretting later. The samples behind these findings are mostly students or online panels answering questionnaires or trading for small stakes, with several field records, the New Jersey drivers, the electricity customers, the health-plan enrollments, the theater tickets, the donor registries and the retirement data, as the exceptions. The loss and action asymmetries fit Nesse's signal-detection analysis, which predicts false alarms from any defense that is cheap to trigger (Nesse, 2005), the analysis behind why my brain treats small things as emergencies.

What the Default Effect Means

Default effect: the tendency for the option that takes effect without any action to be chosen more often than the same option when choosing it requires action. Organ-donor registration ran from about 4 to 28 percent where people had to opt in and above 85 percent where they had to opt out (Johnson and Goldstein, 2003), and automatic enrollment raised 401(k) participation among new hires at one company from 37 to 86 percent (Madrian and Shea, 2001).

What Does This Mean for Anyone Proposing a Change?

Write both columns. List what is given up by staying beside what is given up by switching, so the current supplier's late deliveries appear as a cost in the comparison.

Change the default. Replace automatic renewal with a decision date at which the contract lapses unless someone renews it, so that staying and switching both require an action.

Separate the sunk costs. Put the three years of integration work in its own line, labeled as unrecoverable either way, so it is visible and excluded from the comparison.

Give the alternative an exposure count. A trial order, a site visit, and a reference call are three encounters with the second supplier against three years with the first.

Involve the builders. The person who built the workaround is asked to specify what the new arrangement must do, so the switch builds on their work.

Before the next renewal date, write the two columns for one contract or process your team keeps by default, and put a date on the calendar at which someone has to choose it again.

FAQ

Why does doing nothing feel safer than changing?

Because the current arrangement is the reference point, so the losses of a change are weighted more than its gains (Kahneman, Knetsch and Thaler, 1991), because an option that takes effect without action is chosen more often than the same option requiring action (Johnson and Goldstein, 2003), and because harm after acting is regretted more than equal harm after inaction (Kahneman and Tversky, 1982).

What is status quo bias?

A measured pull toward whatever option is already in place, beyond what the option's features explain. Samuelson and Zeckhauser showed it with questionnaires in which an option became substantially more popular once it was described as already held (Samuelson and Zeckhauser, 1988), and the same pull appears in field records of insurance and electricity choices (Kahneman, Knetsch and Thaler, 1991).

What is the default effect?

The option that applies when nobody acts is chosen far more often than the same option when it must be selected. In an experiment with 161 people, 42 percent consented to organ donation when the form required opting in, 82 percent when it required opting out, and 79 percent with no default (Johnson and Goldstein, 2003); at one company, 61 percent of automatically enrolled employees kept both the default contribution rate and the default fund (Madrian and Shea, 2001).

Is status quo bias only a matter of effort?

No. The bias appears in questionnaires where both options take the same effort to choose (Samuelson and Zeckhauser, 1988), and in markets where owners and non-owners value the same mug differently (Kahneman, Knetsch and Thaler, 1990). The measured mechanisms include the weighting of losses over gains, the valuing of what is held, and the treatment of inaction as safer than action, and effort is a separate factor that defaults add.

Why does a decision feel worse when I made it than when I let it happen?

Because harm that follows an action is judged and regretted more than equal harm that follows inaction. People were reluctant to vaccinate a hypothetical child even when the vaccine's death rate was far below the disease's (Ritov and Baron, 1990), and respondents judged an investor who switched and lost to feel more regret than one who stayed and lost the same amount (Kahneman and Tversky, 1982).

Do people regret not changing?

Yes, over long periods. Gilovich and Medvec found that actions generate more regret in the short term and inactions generate more regret in the long run (Gilovich and Medvec, 1995). A renewal that feels safe this month is an inaction, and inactions were what people regretted when they looked back over years.

Does showing people better data overcome status quo bias?

Not by itself. Across 52 issues and more than 10,100 participants, corrections improved average accuracy on about nine issues in ten, and no correction made people hold the false belief more strongly (Wood and Porter, 2019). Data does not by itself change the reference point or the weighting of losses, which is why changing the default and the comparison matters as well as presenting the evidence.

How do you get a team to switch when the current option is working badly?

Change the default so that staying also requires a decision, list what is given up by staying beside what is given up by switching, label sunk costs as unrecoverable either way, and give the alternative several encounters before the decision (Johnson and Goldstein, 2003; Kahneman, Knetsch and Thaler, 1991; Arkes and Blumer, 1985; Bornstein, 1989).

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Related Posts:

What Does Fight or Flight Mean at Work?

Why Is Change at Work So Hard?

Why Does My Brain Treat Small Things as Emergencies?