AGE DIFFERENCES IN FINANCIAL DECISION-MAKING: USING SIMPLE HEURISTICS

The present study examined age differences in financial decision-making. Fourteen young adults and 14 older adults participated in a simulated Yard Sale, in which they were asked to sell a series of objects at the highest price possible when three offers were randomly and sequentially presented. In addition, participants performed a working memory task. No age differences were found in the total monetary earning, in spite of significant age differences in working memory capacities. Furthermore, both young and older adults used heuristic strategies in the Yard Sale task and outperformed computer simulations using a random guess strategy. Finally, older adults were more likely than young adults to use a single-deal strategy and were more consistent in using this "satisficing heuristic," perhaps to compensate for their reduced working memory capacities.

[1]  Thomas S. Ferguson,et al.  Who Solved the Secretary Problem , 1989 .

[2]  H. Simon,et al.  Invariants of human behavior. , 1990, Annual review of psychology.

[3]  L. Light.  Memory and aging: four hypotheses in search of data. , 1991, Annual review of psychology.

[4]  T. Salthouse.  Mediation of Adult Age Differences in Cognition by Reductions in Working Memory and Speed of Processing , 1991 .

[5]  M. M. Johnson,et al.  Thinking about strategies during, before, and after making a decision. , 1993, Psychology and aging.

[6]  Timothy A. Salthouse,et al.  The aging of working memory. , 1994 .

[7]  S. Mutter,et al.  Aging and illusory correlation in judgments of co-occurrence. , 1994, Psychology and aging.

[8]  L. Hasher,et al.  Directed ignoring: Inhibitory regulation of working memory. , 1994 .

[9]  Y. Kareev.  Through a narrow window: working memory capacity and the detection of covariation , 1995, Cognition.

[10]  T. Salthouse,et al.  General and specific speed mediation of adult age differences in memory. , 1996, The journals of gerontology. Series B, Psychological sciences and social sciences.

[11]  Robin M. Hogarth,et al.  Judgment and decision research: Some historical context. , 1997 .

[12]  J. A. Wilson,et al.  Age differences in performance awareness on a complex financial decision-making task. , 1997, Experimental aging research.

[13]  P. Baltes,et al.  On the incomplete architecture of human ontogeny. Selection, optimization, and compensation as foundation of developmental theory. , 1997, The American psychologist.

[14]  Paul B. Baltes,et al.  On the incomplete architecture of human ontogeny: Selection, optimization, and compensation as foundation of developmental theory , 1997 .

[15]  T. R. Stewart,et al.  Aging and multiple cue probability learning: the case of inverse relationships. , 1997, Acta psychologica.

[16]  Itiel E. Dror,et al.  Age Differences in Decision Making: To Take a Risk or Not? , 1998, Gerontology.

[17]  Denise C. Park,et al.  Aging and the Controlled and Automatic Processing of Medical Information and Medical Intentions , 1999 .

[18]  U. Staudinger,et al.  Wisdom. A metaheuristic (pragmatic) to orchestrate mind and virtue toward excellence. , 2000, The American psychologist.

[19]  Alan G. Sanfey,et al.  Judgment and decision making across the adult life span: A tutorial review of psychological research. , 2000 .

[20]  Lynn Hasher,et al.  Wisdom and aging: irrational preferences in college students but not older adults , 2001, Cognition.