Age Effects and Heuristics in Decision Making

Tibor Besedes, Cary Deck (), Sudipta Sarangi and Mikhael Shor

The Review of Economics and Statistics, 2012, vol. 94, issue 2, 580-595

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. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Keywords: experiments; decision making; optimal choice; age effects; heuristics (search for similar items in EconPapers)
JEL-codes: C91 D03 I18 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (42)

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Working Paper: Age Effects and Heuristics in Decision Making (2010)
Working Paper: Age Effects and Heuristics in Decision Making (2009)
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