Age Effects and Heuristics in Decision Making
AbstractUsing controlled experiments, we examine how individuals 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. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics and Statistics.
Volume (Year): 94 (2012)
Issue (Month): 2 (May)
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Other versions of this item:
- Sudipta Sarangi & Tibor Besedes & Cary Deck & Mikhael Shor, . "Age Effects and Heuristics in Decision Making," Departmental Working Papers 2009-03, Department of Economics, Louisiana State University.
- Tibor Besedes & Cary Deck & Sudipta Sarangi & Mikhael Shor, 2010. "Age Effects and Heuristics in Decision Making," Discussion Papers of DIW Berlin 1047, DIW Berlin, German Institute for Economic Research.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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- Tibor Besedes & Cary Deck & Sarah Quintanar & Sudipta Sarangi & Mikhael Shor, 2012.
"Free-Riding and Performance in Collaborative and Non-Collaborative Groups,"
2012-21, University of Connecticut, Department of Economics.
- Besedes, Tibor & Deck, Cary & Quintanar, Sarah & Sarangi, Sudipta & Shor, Mikhael, 2011. "Free-Riding and Performance in Collaborative and Non-Collaborative Groups," MPRA Paper 33948, University Library of Munich, Germany.
- Besedes, Tibor & Deck, Cary & Sarangi, Sudipta & Shor, Mikhael, 2012.
"Designing a sequential choice architecture to reduce choice overload,"
38173, University Library of Munich, Germany.
- Tibor Besedes & Cary Deck & Sudipta Sarangi & Mikhael Shor, 2012. "Designing a Sequential Choice Architecture to Reduce Choice Overload," Working papers 2012-24, University of Connecticut, Department of Economics.
- Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2012.
"Executive board composition and bank risk taking,"
03/2012, Deutsche Bundesbank, Research Centre.
- Sudipta Sarangi & Tibor Besedes & Cary Deck & Mikhael Shor, .
"Decision-making Strategies and Performance among Seniors,"
Departmental Working Papers
2011-08, Department of Economics, Louisiana State University.
- Besedeš, Tibor & Deck, Cary & Sarangi, Sudipta & Shor, Mikhael, 2012. "Decision-making strategies and performance among seniors," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 524-533.
- Barrutia Legarreta, José María & Espinosa Alejos, María Paz, 2012. "Consumer Expertise or Credit Risk? An empirical analysis of mortgage pricing," DFAEII Working Papers 2012-04, University of the Basque Country - Department of Foundations of Economic Analysis II.
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