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Aging and Decision Making: A Comparison between Neurologically ...

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Sort Desciption: adults contrary to the notion that economic decision making is impaired with ..... decision making faculties decline with aging. Our results counter this ...

Content Inside: 1891 C A L I F O R N I A I N S T IT U T E O F T E C H N O L O G Y Aging and Decision Making: A Comparison between Neurologically Healthy Elderly and Young Individuals Stephanie Kovalchik Colin F. Camerer David M. Grether Charles R. Plott and John M. Allman Abstract We report the results of experiments on economic decisions with two populations one of healthy elderly individuals (average age 82) and one of younger students (average age 20). We examine confidence decisions under uncertainty differences between willingness to pay and willingness to accept and the theory of mind (strategic thinking). Our findings indicate that the older adults’ decision behavior is similar to that of young adults contrary to the notion that economic decision making is impaired with age. Choices over lotteries do not reflect the age differences previously reported in the psychology and biology literature. Moreover some of the demonstrated decision behaviors suggest that the elderly individuals are less biased than the younger individuals.(1)There is a greater prevalence of overconfident behavior in the younger population. (2) Our results show no significant support for a theory of an endowment effect in either population. (3) Both populations perform similarly on the beauty contest task although there is a modest indication of a higher incidence of confused behavior by the older JEL Classification: D00 D80 D81 Keywords: Age overconfidence willingness to pay/accept endowment effect theory of mind game theory risk-taking 1 Corresponding author MSC 323 California Institute of Technology Pasadena CA 91126. stephk@caltech.edu 1 Aging and Decision Making: A Comparison between Neurologically Healthy Elderly and Young Individuals Overview Though it is widely recognized that the population of the United States is aging much of our current understanding in the field of individual decision making is based on data from st ...

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