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Adult age differences in monetary decisions with real and hypothetical reward


Horn, Sebastian; Freund, Alexandra M (2022). Adult age differences in monetary decisions with real and hypothetical reward. Journal of Behavioral Decision Making, 35(2):e2253.

Abstract

Age differences in monetary decisions may emerge because younger and older adults perceive the value of outcomes differently. Yet, age‐differential effects of monetary rewards on decisions are not well understood. Most laboratory studies on aging and decision making have used scenarios in which rewards were merely hypothetical (decisions did not have any real consequences) or in which only small amounts of money were at stake. In the current study, we compared younger adults' (20–29 years) and older adults' (61–82 years) decisions in probabilistic choice problems with real or hypothetical rewards. Decision‐contingent rewards were in a typical range of previous studies (gains of up to ~4.25 USD) or substantially scaled up (gains of up to ~85 USD per participant). Reward type (real vs. hypothetical) affected decision quality, including value maximization, switching between options, and dominance violations (choices of an option that was inferior to another option in all respects). Decision quality was markedly better with real than hypothetical rewards in older adults and correlated with numeracy in both age groups. However, we found no evidence that reward type affected people's risk preferences. Overall, the findings portray a fairly positive picture regarding the use of hypothetical scenarios to assess preferences: With carefully prepared instructions, people from different age groups indicate preferences in hypothetical scenarios that match their decisions with real and much higher rewards. One advantage of using real rewards is that they help to reduce decision noise.

Abstract

Age differences in monetary decisions may emerge because younger and older adults perceive the value of outcomes differently. Yet, age‐differential effects of monetary rewards on decisions are not well understood. Most laboratory studies on aging and decision making have used scenarios in which rewards were merely hypothetical (decisions did not have any real consequences) or in which only small amounts of money were at stake. In the current study, we compared younger adults' (20–29 years) and older adults' (61–82 years) decisions in probabilistic choice problems with real or hypothetical rewards. Decision‐contingent rewards were in a typical range of previous studies (gains of up to ~4.25 USD) or substantially scaled up (gains of up to ~85 USD per participant). Reward type (real vs. hypothetical) affected decision quality, including value maximization, switching between options, and dominance violations (choices of an option that was inferior to another option in all respects). Decision quality was markedly better with real than hypothetical rewards in older adults and correlated with numeracy in both age groups. However, we found no evidence that reward type affected people's risk preferences. Overall, the findings portray a fairly positive picture regarding the use of hypothetical scenarios to assess preferences: With carefully prepared instructions, people from different age groups indicate preferences in hypothetical scenarios that match their decisions with real and much higher rewards. One advantage of using real rewards is that they help to reduce decision noise.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Psychology
Dewey Decimal Classification:150 Psychology
Scopus Subject Areas:Social Sciences & Humanities > General Decision Sciences
Social Sciences & Humanities > Arts and Humanities (miscellaneous)
Social Sciences & Humanities > Applied Psychology
Social Sciences & Humanities > Sociology and Political Science
Social Sciences & Humanities > Strategy and Management
Uncontrolled Keywords:Applied Psychology, Strategy and Management, Arts and Humanities (miscellaneous), General Decision Sciences, Sociology and Political Science
Language:English
Date:1 April 2022
Deposited On:19 Aug 2021 08:18
Last Modified:25 Feb 2024 02:41
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:0894-3257
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1002/bdm.2253
Project Information:
  • : FunderSNSF
  • : Grant ID100019_185463
  • : Project TitleAdult age differences in remembering gain- and loss-related intentions: A motivational perspective
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)