Aging and decision making: a comparison between neurologically healthy elderly and young individuals

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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. Moreover, some of the demonstrated decision behaviors suggest that the elderly individuals are less biased than the younger individuals.

Section snippets

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 student populations. While this could be a consequence of subject availability, it may reflect a common though largely unsubstantiated belief that decision making ability declines with aging (Peters et al., 2000). Many older individuals are productive and intellectually viable throughout their lives. Still, others

Subject population and general experimental design

We interviewed two age groups: a young population (ages 18–26, 51 percent female) and an elderly population (ages 70–95, 70 percent female). The older subjects (N = 50) serve as controls for the Alzheimer's Disease Research Center at the University of Southern California. Based on annual cognitive and behavioral testing, the older individuals are considered neurologically healthy having no history of dementia or mental illness. The student population (N = 51) consisted of healthy undergraduates

Confidence

Research suggests that non-expert individuals are typically overconfident; they overestimate the quality of their own abilities or knowledge (Svenson, 1981, Weinstein, 1980) and state extreme probabilities more often than they should. Work in economic theory, particularly with business-related forecasting, has provided further support for this behavioral phenomenon (Camerer and Lovallo, 1999).

The reasons for overconfidence when answering trivia questions are a subject of intense debate among

Decision making under uncertainty

Two gambling tasks are employed. The first task is a modified version of the card-deck gambling task of Bechara et al. (2000) that has been used extensively in the biology and psychology literature.

In the modified gambling task, subjects selected cards from one of two decks to earn cash. The cards were pre-organized so that one deck (A) had an overall loss of $2.50 every 10 cards and the other deck (B) had an overall gain of $2.50 every 10 cards. All the cards in deck A gave $1.00 on every turn

Willingness to pay/willingness to accept asymmetry

Observed differences between stated willingness to pay (WTP) for an item and willingness to accept payment (WTA) for the same item have been a subject of extensive research. In previous investigations of this behavior, individuals have been divided into two groups: sellers and buyers. The sellers are given an item and told that they are its owners. They are then asked to indicate the minimum they would accept to sell the item, the WTA. Buyers are shown the same item and are asked to indicate

Strategic thinking

In many situations a decision maker's outcome does not depend on his or her own choice alone but upon the choices of others. Investing in the stock market, crossing an intersection where there is opposing traffic, and playing poker are all examples. A game known as the “p-beauty-contest” has been widely used in economic studies to examine some of the simplest principles of interdependent decision making (Nagel, 1995, Nagel et al., 1999, Stahl, 2001). In the “p-beauty-contest” game, subjects

Summary and conclusions

We conducted four sets of experiments using 50 high functioning neurologically healthy older subjects (average age 82) and 51 healthy students (average age 20). The experiments were chosen on two criteria. First, we used experiments that a priori seemed likely to elicit different responses from the two groups. Second, we wanted experiments that had been used in the economic, psychological or neuroscientific literatures so that we could concentrate on observed behavior of the two subject pools

Acknowledgments

We thank Dr. Gail Murdock and Dr. Linda Clark, from the Alzheimer's Disease Research Center, who coordinated the recruitment of the older population and provided demographic data for these subjects. We also thank Kathy Zeiler for her assistance with the loss-aversion methodology, as well as Neda Afsarmanesh for her involvement in the questionnaire design. The financial support of the National Science Foundation, the Summer Undergraduate Research Fellowship at the California Institute of

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