Age Effects and Heuristics in Decision Making

Using controlled experiments,weexamine howindividuals make choices when faced with multiple options. Choice tasks are designed to
mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked, allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age, with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.
 

• Tibor Besedes

Besedes, Tibor, Deck, Cary, Sarangi, Sudipta, and Shor, Mikhael, "Age Effects and Heuristics in Decision Making," Review of Economics and Statistics (2012), 94(2): 580-595.

• Behavioral Economics
• Experimental Economics

• Full Article

• School of Economics