Age and decision making of relevance for pensions

While the behavioural biases we identify are generally considered to be universal among humans, research finds that there are two aspects of aging that can lead older people to be more prone to certain types of biases. As we get older, we increasingly behave in ways that maintain positive emotions and avoid negative emotions. We also show signs of having reduced cognitive capacity. This can lead older people to:

• Seek less information when making decisions as a way of minimizing the negative emotions associated with making difficult choices.

• Show a tendency to focus on one or two key alignable features of a choice, rather than taking on the difficult or impossible task of determining likely benefits across multiple, potentially nonalignable features.

• Become more likely to choose an option when it is framed as a gain rather than a loss.

• Struggle to incorporate new information into existing knowledge structures, resulting in them relying more on automatic, rather than deliberative, processes when making decisions.

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