This proposal argues that we can leverage what we know about memory changes over the lifespan to understand how decision-making changes as people get older. The proposed research concentrates on four important, robust and well-studied decision phenomena that are problematic for younger adults and may be stronger in older adults: The endowment effect, asymmetries in intertemporal choice, default effects, and anchoring. Using an approach to decision-making called """"""""Preferences-as- Memories"""""""" (PAM), we develop models of how people make judgments and choices in these situations and describe the role of memory processes in the process of preference construction, particularly the role of interference, a memory characteristic which changes over the life course. We then propose experiments to test these models using both personally administered and web-based experiments that will contrast the pattern of preferences exhibited by older adults with those of younger adults. Using the web allows one to reach a broad population of older and younger adults more quickly. Personally administered experiments allow for greater experimental control and for a fine-tuning of new methodologies and procedures. Our experiments will employ methods for measuring choices and preferences in well-defined decision-making tasks, along with tools for measuring information retrieval during decision-making both implicitly and explicitly. By further measuring performance in a range of additional cognitive domains, we will also be able to test between alternative mediating mechanisms for the preference phenomena that will be under study. The decision-making phenomena that will be examined have implications for the welfare of older adults. If, for example, older people show greater endowment effects (and therefore greater loss aversion), they may be more attached to some possessions and avoid change, even when this may not be in their best interest. Because the proposed research generates process models of how memory representations and processes affect decisions, it provides directions for the development of interventions that can aid and improve decisions - an important contribution in an aging society that tries to shift important decisions (e.g., on pension investments and health care choices) from government agencies to individuals.
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