Consistency in Simple vs. Complex Choices Over the Life Cycle

45 Pages Posted: 2 Mar 2015

See all articles by Isabelle Brocas

Isabelle Brocas

University of Southern California - Department of Economics

Juan D. Carrillo

University of Southern California - Department of Economics; Centre for Economic Policy Research (CEPR)

T. Dalton Combs

University of Southern California

Niree Kodaverdian

University of Southern California

Date Written: March 2015

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.

Keywords: aging, complexity, laboratory experiments, revealed preferences

JEL Classification: C91, D11, D12

Suggested Citation

Brocas, Isabelle and Carrillo, Juan D. and Combs, T. Dalton and Kodaverdian, Niree, Consistency in Simple vs. Complex Choices Over the Life Cycle (March 2015). CEPR Discussion Paper No. DP10457, Available at SSRN: https://ssrn.com/abstract=2572455

Isabelle Brocas (Contact Author)

University of Southern California - Department of Economics ( email )

3022 S. Vermont Ave
Los Angeles, CA 90089
United States
213-740-8842 (Phone)
213-740-8543 (Fax)

HOME PAGE: http://www-rcf.usc.edu/~brocas/

Juan D. Carrillo

University of Southern California - Department of Economics ( email )

3022 S. Vermont Ave.
Los Angeles, CA 90089
United States
213-740-3526 (Phone)
213-740-8543 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

T. Dalton Combs

University of Southern California

2250 Alcazar Street
Los Angeles, CA 90089
United States

Niree Kodaverdian

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

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