Age Effects and Heuristics in Decision Making

Title: Age Effects and Heuristics in Decision Making
Format: Journal Article
Publication Date: May 2012
Published In: Review of Economics and Statistics
Description:

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.
 

Ivan Allen College Contributors:
External Contributors: Cary Deck, Sudipta Sarangi, and Mikhael Shor
Citation:

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.

Categories:
  • Behavioral Economics
  • Experimental Economics
Related Links:
Related Departments:
  • School of Economics