Recently I had done some reflections about my investing journey, which you can find under the Reflections tab on my blog. It prompted me to think about the influence of Status Quo bias in our investing journey. First of all, what is Status Quo Bias? Status quo bias is an emotional bias; a preference for the current state of affairs. The current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss. Status quo bias should be distinguished from a rational preference for the status quo ante, as when the current state of affairs is objectively superior to the available alternatives, or when imperfect information is a significant problem. A large body of evidence, however, shows that status quo bias frequently affects human decision-making
So how could Status Quo Bias limit or influence your returns?
- Continuing to ......