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An empirical examination of reducing status quo bias in heterogeneous populations: evidence from the South African water sector

Murwirapachena, Genius and Dikgang, Johane (2018): An empirical examination of reducing status quo bias in heterogeneous populations: evidence from the South African water sector.

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Abstract

Choice experiments typically include a status quo option, which often describes the current scenario. This is to secure the validity and applicability of choice experiments. People have a propensity to choose what they are familiar with, despite being presented with alternatives that seem better (i.e. the ‘status quo effect’). Various experiments have reliably demonstrated this effect. The tendency to prefer the current scenario disproportionally does not mimic real-life preferences; therefore, status quo bias is undesirable. In a split sample framework, we test for the effects of reducing status quo bias by considering a heterogeneous sample. We use generalised mixed logit models to carry out the tests. The tests reveal that presenting each split sample with a partially relevant status quo significantly reduces the status quo bias problem.

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