Age Effects and Heuristics in Decision Making

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

No 1047, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

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.

Keywords: experiments; decision making; optimal choice; age effects; heuristics (search for similar items in EconPapers)
JEL-codes: C91 D3 I18 (search for similar items in EconPapers)
Pages: 32 , Anh. p.
Date: 2010
New Economics Papers: this item is included in nep-age, nep-cbe and nep-exp
References: View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Age Effects and Heuristics in Decision Making (2012)
Working Paper: Age Effects and Heuristics in Decision Making (2009)
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