Consider the status quo bias model.

U(x1; x2);

in which Q(r1; r2) = {(x1; x2) : u1(x1; x2) >/ u1(r1; r2) and u2(x1; x2) >/ u2(r1; r2)}.

Suppose (r1; r2) = (2; 2), and the decision maker can choose from four job

offers. The first job offer is the current one; that is, the decision maker keeps

her current job. The other three are (1; 30), (2; 3), and (3; 2).

(a) Which job o¤er has the highest value according to U?

(b) Which job o¤ers are contained in Q(r1; r2)?

(c) Will the decision maker switch to a new job? Which one?

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