Discussion Paper Details

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Title: Consistency in Simple vs. Complex Choices over the Life Cycle

Author(s): Isabelle Brocas, Juan D Carrillo, T. Dalton Combs and Niree Kodaverdian

Publication Date: March 2015

Keyword(s): aging, complexity, laboratory experiments and revealed preferences

Programme Area(s): Public Economics

Abstract: 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.

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Bibliographic Reference

Brocas, I, Carrillo, J, Combs, T and Kodaverdian, N. 2015. 'Consistency in Simple vs. Complex Choices over the Life Cycle'. London, Centre for Economic Policy Research.