Consumer Rationality and the Status Quo

Posted: 19 Nov 2008

See all articles by Raymond S. Hartman

Raymond S. Hartman

Greylock McKinnon Associates

Michael J. Doane

Competition Economics LLC

chang ki Woo

affiliation not provided to SSRN

Date Written: 1991

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, the authors 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. They find substantial status quo effects, which must be addressed in welfare comparisons regarding electric service reliability. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

Hartman, Raymond S. and Doane, Michael J. and Woo, chang ki, Consumer Rationality and the Status Quo (1991). Quarterly Journal of Economics, 1991, Available at SSRN: https://ssrn.com/abstract=1303607

Raymond S. Hartman

Greylock McKinnon Associates ( email )

75 Park Plaza
4th Floor
Boston, MA 02116
United States

Michael J. Doane (Contact Author)

Competition Economics LLC ( email )

2000 Powell Street
Suite 510
Emeryville, CA 94608
United States
510-655-7503 (Phone)

Chang ki Woo

affiliation not provided to SSRN

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