Reference Points and Omission Bias

Abstract

Subjects were asked to evaluate the choice of options leading to known outcomes, or to say how they would feel about a chance outcome, in hypothetical decisions. We independently manipulated the value of the status quo and the assignment of the better or worse outcome to an act or an omission. Acts leading to the worse outcome were always considered worse than omissions leading to the worse outcome. This act-omission difference was reduced or reversed for the better outcome. Most experiments showed an overall bias toward omissions (combining better and worse). Little evidence was found for greater omission bias for losses relative to the status quo than for gains. A bias toward maintaining the status quo itself was found, however, independently of omission bias. Most of the results can be explained by norm theory and by loss aversion, but other possible accounts are inconsistent with the results.