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.