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.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1047.
Length: 32 , Anh. p.
Date of creation: 2010
Date of revision:
Publication status: Published in: Journal of Economic Behavior & Organization 81 (2012), 2, 524-533
experiments; decision making; optimal choice; age effects; heuristics;
Other versions of this item:
- 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
This paper has been announced in the following NEP Reports:
- NEP-AGE-2010-09-11 (Economics of Ageing)
- NEP-ALL-2010-09-11 (All new papers)
- NEP-CBE-2010-09-11 (Cognitive & Behavioural Economics)
- NEP-EXP-2010-09-11 (Experimental Economics)
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