Effects of Age and Initial Risk Perception on Balloon Analog Risk Task: The Mediating Role of Processing Speed and Need for Cognitive Closure

Abstract

According to the dual-process theoretical perspective adopted in the presented research, the efficiency of deliberative processes in decision making declines with age, but experiential processes are relatively well-preserved. The age-related differences in deliberative and experiential processes in risky decision-making were examined in this research by applying the Balloon Analog Risk Task (BART). We analyzed the influence of age on risk acceptance and decision-making performance in two age groups of female participants (younger adults, n = 81; older adults, n = 76), with additional experimental manipulation of initial risk perception. We predicted and confirmed that aging significantly worsens performance on the behavioral BART measures due to age-related decline in deliberative processes. Older participants were found to exhibit significantly higher risk aversion and lower BART performance, and the effect of age was mediated by cognitive (processing speed) and motivational (need for cognitive closure) mechanisms. Moreover, older adults adapt to the initial failure (vs. success) similarly, as younger adults due to preserved efficiency of experiential processes. These results suggest future directions for minimizing negative effects of aging in risky decision-making and indicate compensatory processes, which are preserved during aging.

Mapping risk perceptions in dynamic risk‐taking environments

“…In particular, risk perceptions are shaped by early experiences, which in turn impact risk‐taking behavior lastingly. These results corroborate previous findings that report the importance of early experience in the BART (Koscielniak et al, ; Walasek et al, ) and even a wider range of tasks (Shteingart et al, ). Our results go beyond these findings in that they isolate these effects to participants' risk perceptions.…”

“…Doing so also provided us a means to test the hypothesis that initial experiences in the BART play a large role in shaping participants' risk perceptions, which in turn might impact risk‐taking behavior throughout the task. That is, building on the finding from Koscielniak et al () that the experience on first three balloons in the BART has a high impact on subsequent risk‐taking behavior (see also ; Shteingart et al, ; Walasek et al, ), we hypothesized that risk perceptions play a mediating role between participants' early experiences and risk‐taking behavior in the BART. To test this hypothesis, we manipulated the explosion point of the first balloon, holding everything else constant.…”

“…For example, why do people's initial experiences appear to have such a strong impact on behavior? One study showed that the first three explosions in the BART have a substantial influence on people's behavior throughout the task (Koscielniak, Rydzewska, & Sedek, ), and another study demonstrated that the first few explosions shape people's certainty about their decisions (Walasek, Wright, & Rakow, ). In a related paradigm, even altering only people's very first experience had a lasting impact on their behavior throughout the task (Shteingart, Neiman, & Loewenstein, ).…”

Behavioral finance and games: simulations in the academic environment

“…For these authors, women prefer long-term investments. Th e age of the students in Group 1 varied between 18 and 37 years old, which can also be corroborated by the studies that indicate that younger subjects are more tolerant of risk and uncertainty, as according to James et al (2015) and Koscielniak et al (2016). Th e social-economic level of the students from Group 1 is in the range between 10 and more than 20 minimum wages and for Group 2 it is between six and 10 minimum wages, which can be considered a good salary level, thus putting them in the more risk-tolerant group of individuals, according to Kuzniak, Rabbani, Heo, RuizMenjivar, and Grable (2015).…”

“…Th e person's life cycle can impact his/her risk tolerance, as according to studies from James, Boyle, Yu, Han, and Bennett (2015) and Koscielniak, Rydzewska, and Sedek (2016), which conclude that the more advanced the age, the lower the risk tolerance and the more diminished the decision-making performance.…”