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Pay One or Pay All? The Role of Incentive Schemes in Decision Making Across Adulthood
Sebastian S Horn1, Thierry Schaltegger1, Ryan Best2
1Department of Psychology, University of Zurich, Zurich, Switzerland.
Summary
Monetary incentive structures significantly influence decision-making in both younger and older adults. People tend to be less cautious when incentives accumulate (pay-all) compared to single incentives (pay-one).
Area of Science:
- Cognitive psychology
- Neuroscience of decision-making
- Behavioral economics
Background:
- Decision-making processes in younger and older adults can differ.
- Monetary incentives are commonly used to influence choices.
- Understanding how incentive structures affect decisions is crucial for research and policy.
Purpose of the Study:
- To investigate how different monetary incentive schemes (pay-one vs. pay-all) impact decision-making in younger and older adults.
- To analyze age-related differences in decision quality, risk-taking, and sensitivity to outcomes and probabilities under varying incentive conditions.
Main Methods:
- Participants (younger and older adults) were assigned to either a pay-one or pay-all incentive condition.
- Binary choices involving monetary lotteries in gain, loss, and mixed domains were presented.
- Computational modeling based on cumulative prospect theory was employed to assess decision parameters.
Main Results:
- Decision quality and risk aversion were higher in the gain domain, irrespective of age.
- Older adults exhibited higher loss aversion and lower choice sensitivity compared to younger adults.
- The pay-one condition led to more curved value functions and higher choice sensitivity than the pay-all condition.
Conclusions:
- Accumulating incentives (pay-all) have similar portfolio effects on decision-making for both age groups.
- Individuals generally make less cautious decisions in pay-all scenarios compared to pay-one scenarios.
- The design of incentive schemes is an important factor to consider in aging and decision research.
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