6. INDIVIDUAL DIFFERENCES AND AGE DIFFERENCES IN JUDGEMENT AND DECISION MAKING

Question 1

Maximizers: desire the best possible result

Answer 1

o	Compare alternatives
	Often less satisfied 
	Post decisions regret
	Lower wellbeing
	Worse life outcomes
	Problematic decision-making styles

Question 2

Satisficers

Answer 2

desire a result that is good enough to meet some criterion

o Good enough options and terminate searches for alternatives

Question 3

Maximization paradox (Dar-Nimrod, 2009)

Answer 3

• Prefer more choice to less
• Experience worse subjective outcomes when they choose among more options
• Why do maximizers continue to value choice in the face of substantial dissatisfaction, regret, and stress during the choice process?
  o maximize both positive and negative outcomes
  o Belief that objectively identifying the best alternative is possible, motivates maximizers to expend more energy during the choice process
  o is often impossible to verify that one has successfully chosen the best option

Question 4

Two aspects of maximizing:

Answer 4

1. Maximization goal: best possible choice

2. Maximization strategy: Alternative search  best option

Question 5

Parker & Fischhoff, 2005 – to what extent:

Answer 5

• Individuals show consistent performance differences across typical behavioral decision-making tasks
• Those differences correlate with plausible real-world correlates of good decision making
• Responses were analysed in terms of consistency and stability over time (Internal validity)
• Included measures of cognitive ability and style expected to be related to decision-making competence (External validity)

Question 6

Age & Cognition:

Answer 6

• Cognitive functioning & age – Two components of cognition:
  o Mechanics: “Hardware” speed and efficiency: aspects of intelligence non-dependent on knowledge
  o Pragmatics: Experience-based knowledge (“software”): Writing and reading skills; language; professional competencies

Question 7

Four main skills relevant to DMC:

Answer 7

1. Cognitive deliberation:
   - Deliberation of available options and selecting
   - Abilities: processing, speed, working memory, executive functions, numeracy
2. Experience:
   - Develop experience-based knowledge
   - Practice and training
   - Older  financial knowledge
3. Emotion regulation
   - Distracting people
   - Improve quality of decisions
   - Older  deeper understanding of emotional states, emotion regulation, experience more positive
   - Resistance to sunk costs: ruminate less about past losses  apply better sunk cost rule
4. Focused/selective motivation
   - Older  more selective how to spend their cognitive effort
   - Older less motivated to use strategies such as maximizing
   - Older reduce cognitive effort by considering less information
   - Invest more effort by considering less information and comparing fewer options
   - Invest more in decision when perceiving context as personally relevant

Question 8

Interventions targeting the four main skills:

Answer 8

1. Cognitive deliberation
   - Teach strategies: memory, reasoning, speed
   - Interventions that encourage to use their cognitive deliberative skills in enjoyable activities
   - Do not feel confident about performance
   - Less motivated to think hard about complex problems
2. Experience bases knowledge:
   - Rules to retirement planning
   - Financial rules of thumb
3. Emotions
   - Short term boosts to their mood
   - Positive mood inductions  flexibility
4. Selective motivation
   - Information should be made
   - Work harder when personally relevant
   - Add personal narratives
   - Low-numerate individuals