Consistency in Simple vs. Complex Choices Over the Life Cycle
45 Pages Posted: 2 Mar 2015
Date Written: March 2015
Employing a variant of GARP, we study consistency in aging by comparing the choices of younger adults (YA) and older adults (OA) in a 'simple', two-good and a `complex' three-good condition. We find that OA perform worse than YA in the complex condition but similar in the simple condition. Working memory scores correlate significantly with consistency levels. Finally, OA are more prone to use simple heuristics than YA, and this helps them behave consistently in the simple condition. Our findings suggest that the age-related deterioration of neural faculties responsible for working memory is an obstacle for consistent decision-making.
Keywords: aging, complexity, laboratory experiments, revealed preferences
JEL Classification: C91, D11, D12
Suggested Citation: Suggested Citation