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- Title
AGE EFFECTS AND HEURISTICS IN DECISION MAKING.
- Authors
Besedeš, Tibor; Deck, Cary; Sarangi, Sudipta; Shor, Mikhael
- 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.
- Subjects
DECISION making; CHOICE (Psychology); INFLUENCE of age on ability; HEURISTIC; HEALTH insurance; RETIREMENT planning
- Publication
Review of Economics & Statistics, 2012, Vol 94, Issue 2, p580
- ISSN
0034-6535
- Publication type
Article
- DOI
10.1162/REST_a_00174