Age Effects and Heuristics in Decision Making
Abstract
Using 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.Download Info
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Paper 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
Handle: RePEc:diw:diwwpp:dp1047
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Related research
Keywords: experiments; decision making; optimal choice; age effects; heuristics;Other versions of this item:
- Tibor Besedeš & Cary Deck & Sudipta Sarangi & Mikhael Shor, 2012. "Age Effects and Heuristics in Decision Making," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 580-595, May.
- 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.
- 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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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Tibor Besedes & Cary Deck & Sarah Quintanar & Sudipta Sarangi & Mikhael Shor, 2012.
"Free-Riding and Performance in Collaborative and Non-Collaborative Groups,"
Working papers
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.
- 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.
- Besedes, Tibor & Deck, Cary & Sarangi, Sudipta & Shor, Mikhael, 2012. "Designing a sequential choice architecture to reduce choice overload," MPRA Paper 38173, University Library of Munich, Germany.
- Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2012.
"Executive board composition and bank risk taking,"
Discussion Papers
03/2012, Deutsche Bundesbank, Research Centre.
- Allen N. Berger & Thomas Kick & Klaus Schaeck, 2012. "Executive Board Composition and Bank Risk Taking," Working Papers 12004, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
- 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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