Risk preferences and aging: The “certainty effect” in older adults' decision making.

Mather, Mara; Mažar, Nina; Gorlick, Marissa A.; Lighthall, Nichole R.; Burgeno, Jessica N.; Schoeke, Andrej; Ariely, Dan

doi:10.1037/a0030174

Cited by 177 publications

(172 citation statements)

References 60 publications

Supporting

Mentioning

154

Contrasting

Unclassified

Order By: Relevance

“…The control variables, such as gender and age, are significant in the direction we expected (Croson and Gneezy, 2009;Mather et al, 2012). Males are significantly more risk/ambiguity-seeking than females, while younger individuals are more risk/ambiguity-seeking than older ones, controlling for migration status.…”

Section: Results 1 (Preference Under State Uncertaintymentioning

confidence: 65%

A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness

Li¹,

Houser²,

Mao³

et al. 2014

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Using a field experiment in China, we study whether migration status is correlated with attitudes toward risk, ambiguity, and competitiveness. Our subjects include migrants and non-migrants. We find that, migrants exhibit no differences from non-migrants in risk and ambiguity preferences elicited using pairs of lotteries; however, migrants are significantly more likely to enter competition in the presence of strategic uncertainty when they expect competitive entries from others. Our results suggest that migration may be driven more by a stronger belief in one's ability to succeed in an uncertain and competitive environment than by risk attitudes under state uncertainty.JEL Classification: C93, D03, D63, J61

show abstract

Section: Results 1 (Preference Under State Uncertaintymentioning

confidence: 65%

A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness

Li¹,

Houser²,

Mao³

et al. 2014

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…This prominence is such that important lines of research have relied upon a weak definition of risk attitudes and the reflection effect. For example, in the study of age differences in decision making, many researchers have focused on whether the reflection effect increases with age (e.g., Mather et al 2012;Tymula et al 2013; for a review and meta-analysis, see Best & Charness, 2015). Overall, results indicate that older adults focus more on maintenance of the status quo and loss avoidance, leading to an increase of the reflection effect (see Best & Charness 2015).…”

Section: Towards the Use Of Strong Risk Attitudesmentioning

confidence: 80%

“…A categorical distinction between risky and riskless options can be found in several empirical studies: For instance, Schneider and Lopes (1986) found the reflection effect to be extremely irregular when individuals had to choose between pairs of multiple-outcome lotteries (see also Levy, 2010; but see Budescu & Weiss 1987). More recently, Mather et al (2012) showed that younger and older adults manifested the reflection effect when comparing between lotteries (in line with Budescu and Weiss 1987), but noted that both age groups only differed in their risk attitudes when one of the options available was a certain outcome.…”

Section: Towards the Use Of Strong Risk Attitudesmentioning

confidence: 99%

“…More specifically, the goal of the present paper is to argue for a wider use of a strong definition of risk, which focuses on attitudes towards degrees of risk. As discussed in detail below, some researchers have expressed concerns regarding the generalizability of weak attitudes to its strong counterpart (see Mather et al 2012;Schneider & Lopes 1986). Moreover, unlike other definitions of risk attitudes, the behavioral definition that we advocate can be derived from a general set of theoretical principles (Luce, 2010a).…”

mentioning

confidence: 99%

See 1 more Smart Citation

Individual classification of strong risk attitudes: An application across lottery types and age groups

2017

View full text Add to dashboard Cite

Empirical evaluations of risk attitudes often rely on a weak definition of risk that concerns preferences towards risky and riskless options (e.g., a lottery vs. a sure outcome). A large body of work has shown that individuals tend to be weak risk averse in choice contexts involving risky and riskless gains but weak risk seeking in contexts involving losses, a phenomenon known as the reflection effect. Recent attempts to evaluate age differences in risk attitudes have relied on this weak definition, testing whether the reflection effect increases or diminishes as we grow older. The present work argues that weak risk attitudes have limited generalizability and proposes the use of a strong definition of risk that is concerned with preferences towards options with the same expected value but different degrees of risk (i.e., outcome variance). A reanalysis of previouslypublished data and the results from a new study show that only a minority of individuals manifests the reflection effect under a strong definition of risk, and that, when facing certain lottery-pair types, older adults appear to be more risk seeking than younger adults.

show abstract

“…A prior meta-analysis on the general framing effect highlighted this issue, noting that common framing paradigms overrepresented low probabilities in gain-framed scenarios and high probabilities in loss-framed scenarios as a consequence of keeping expected values equal across conditions [10]. From the pool of 18 studies used in Best and Charness’s meta-analysis [18], only 5 used designs that included a full range of probabilities for both gain and loss frames, only 1 study [19] reported data by age groups across all probability conditions, and none reported analyses on the influence of probability within a frame. The current study serves as a follow-up to Mather et al [19], specifically focusing on age differences in the effect of framing and the influence of the outcome probability associated with the risky option.…”

Section: Introductionmentioning

confidence: 99%

Age, Loss Minimization, and the Role of Probability for Decision-Making

Best

Freund

2018

Gerontology

View full text Add to dashboard Cite

Background: Older adults are stereotypically considered to be risk averse compared to younger age groups, although meta-analyses on age and the influence of gain/loss framing on risky choices have not found empirical evidence for age differences in risk-taking. Objective: The current study extends the investigation of age differences in risk preference by including analyses on the effect of the probability of a risky option on choices in gain versus loss situations. Methods: Participants (n = 130 adults aged 19–80 years) chose between a certain option and a risky option of varying probability in gain- and loss-framed gambles with actual monetary outcomes. Results: Only younger adults displayed an overall framing effect. Younger and older adults responded differently to probability fluctuations depending on the framing condition. Older adults were more likely to choose the risky option as the likelihood of avoiding a larger loss increased and as the likelihood of a larger gain decreased. Younger adults responded with the opposite pattern: they were more likely to choose the risky option as the likelihood of a larger gain increased and as the likelihood of avoiding a (slightly) larger loss decreased. Conclusion: Results suggest that older adults are more willing to select a risky option when it increases the likelihood that larger losses be avoided, whereas younger adults are more willing to select a risky option when it allows for slightly larger gains. This finding supports expectations based on theoretical accounts of goal orientation shifting away from securing gains in younger adulthood towards maintenance and avoiding losses in older adulthood. Findings are also discussed in respect to the affective enhancement perspective and socioemotional selectivity theory.

show abstract

Risk preferences and aging: The “certainty effect” in older adults' decision making.

Cited by 177 publications

References 60 publications

A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness

A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness

Individual classification of strong risk attitudes: An application across lottery types and age groups

Age, Loss Minimization, and the Role of Probability for Decision-Making

Contact Info

Product

Resources

About