Please keep it. It’s a great example. Of course the status quo bias is a useful heuristic sometimes, but that doesn’t mean consumers shouldn’t be aware of it and think things through.
Some things that look like biases are not so much, when looked at from a situational perspective. Taleb quotes the example of hyperbolic discounting (HD).
In HD people apply a much higher discount rate between e.g., today and tomorrow than bettween one year from not and one year and one day from now. Taleb argues that this can be rational if the person may now pay up at all i.e., credit risk. A person is much more likely to pay up now than tomorrow, because they are here today, but tomorrow they could be spending the money in Rio. In contrast the difference in credit risk between 365 and 366 days is negligible.
There’s another reason that it is reasonable to say no if a utility company offers to improve your service for more money.
Namely, we already know that they do not care about your service, but about their profits, and about the service only insofar as it helps their profits. So it is quite likely that there will be no real improvement to your service, but it will remain approximately the same. The company rightly expects that you will not keep careful track and that you will assume that your service has improved. Or if it does improve, it will not improve as much as they said, because they know you will not be keeping track well, and that even if you do, you will not have much recourse.
This is even more the case if some other company offers to replace your service, saying that you will get better service at a lower price. In Italy utility companies send roaming people offering this to everyone. If you accept, you will get worse service at a higher price, and you will have no legal recourse, because what they said about the price was technically true in terms of the base price, but false once all the calculations are done.
That is also a very good point against the utility company example.
I think I’ll remove it, unless somebody persuasively argues in its favor in a few hours or so.
Why don’t you keep it, but add a note?
I ended up adding a brief note linking to these comments.
Please keep it. It’s a great example. Of course the status quo bias is a useful heuristic sometimes, but that doesn’t mean consumers shouldn’t be aware of it and think things through.
Some things that look like biases are not so much, when looked at from a situational perspective. Taleb quotes the example of hyperbolic discounting (HD).
In HD people apply a much higher discount rate between e.g., today and tomorrow than bettween one year from not and one year and one day from now. Taleb argues that this can be rational if the person may now pay up at all i.e., credit risk. A person is much more likely to pay up now than tomorrow, because they are here today, but tomorrow they could be spending the money in Rio. In contrast the difference in credit risk between 365 and 366 days is negligible.
There’s another reason that it is reasonable to say no if a utility company offers to improve your service for more money.
Namely, we already know that they do not care about your service, but about their profits, and about the service only insofar as it helps their profits. So it is quite likely that there will be no real improvement to your service, but it will remain approximately the same. The company rightly expects that you will not keep careful track and that you will assume that your service has improved. Or if it does improve, it will not improve as much as they said, because they know you will not be keeping track well, and that even if you do, you will not have much recourse.
This is even more the case if some other company offers to replace your service, saying that you will get better service at a lower price. In Italy utility companies send roaming people offering this to everyone. If you accept, you will get worse service at a higher price, and you will have no legal recourse, because what they said about the price was technically true in terms of the base price, but false once all the calculations are done.