Abstract
An important implication of reference dependence and loss aversion is that stability—the current state—is favored over change. Kahneman and Tversky (1984, p. 348) exemplified this by means of the story of two identical twins who find two alternative environments equally attractive. If, by a stroke of fate, the twins are separated and placed in the two environments, they will adopt their new states as reference points. Since they evaluate the advantages and disadvantages of each other’s environments on basis of their reference states, both will no longer be indifferent between the environments but will prefer to stay where fate drove them to.
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© 1999 Physica-Verlag Heidelberg
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Traub, S. (1999). The Status Quo Bias. In: Framing Effects in Taxation. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-95938-7_5
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DOI: https://doi.org/10.1007/978-3-642-95938-7_5
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-1240-4
Online ISBN: 978-3-642-95938-7
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