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Age Effects and Heuristics in Decision Making
Tibor Besedeš1, Cary Deck, Sudipta Sarangi
1Georgia Institute of Technology.
The Review of Economics and Statistics
|May 1, 2012
Summary
As the number of choices increases, people are less likely to choose the best option, especially older adults. Older individuals also use less effective decision-making strategies, leading to poorer choices.
Area of Science:
- Behavioral Economics
- Decision Science
- Cognitive Psychology
Background:
- Individuals frequently make complex choices regarding financial and health plans.
- Understanding decision-making processes is crucial for designing effective choice architectures.
Purpose of the Study:
- To investigate how the number of options affects optimal decision-making.
- To examine age-related differences in choice heuristics and decision quality.
Main Methods:
- Controlled experiments simulating the selection of health insurance, prescription drugs, and retirement plans.
- Analysis of decision outcomes based on the number of available options.
- A secondary experiment to validate observed heuristics across different age groups.
Main Results:
- The likelihood of selecting the optimal option decreases as the number of choices increases.
- This decline in optimal choice selection is more significant in older subjects.
- Older subjects demonstrated a greater reliance on suboptimal decision rules compared to younger subjects.
Conclusions:
- Increased choice complexity impairs optimal decision-making, particularly for older adults.
- Age influences the heuristics employed, with older individuals using less effective strategies.
- Interventions may be needed to support older adults in making complex decisions.
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