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Category: Project

Description: This project is funded by the National Science Foundation, Award Number 2116369. Each year, 1 out of every 18 older adults is the victim of financial fraud, resulting in estimated losses of $37 billion. These older adults are likely targeted because of this age group’s growing size, affluence, and power. Thus, it is important to understand why older adults sometimes make decisions that are different than younger adults as these age-related differences in decision making have enormous social and economic consequences. An overall goal of this project is to identify the psychological mechanisms that underlie age differences in risky decision making over the adult life span. This mechanistic focus generates critical insight about aging and decision making that guides the development of interventions to improve decision strategies in vulnerable older adults. This project also seeks to increase financial literacy in the general public by developing accessible educational materials appropriate for the adult population. This project addresses age differences in decision making when considering positively-skewed risks. Positively-skewed risks are decisions that involve options that promise large but unlikely gains coupled with small but likely losses. Older adults tend to accept these risks more often than younger adults or have a Positive-Skew bias. Integrating theories and methods from disparate subfields in psychology and economics, the project examines two potential psychological mechanisms that underlie this effect. One mechanism is an age-related tendency to attend to, and remember positive information, or the age-related ‘positivity effect’ that leads to a Positive-Skew bias. The attention hypothesis explores the tendency of older adults to focus on positive information (including attending to and remembering positive information). Activating other goals may lessen the bias by reducing attention. Another mechanism examines the selective avoidance of losses, which requires engaging cognitive control. The ability to engage cognitive resources is inhibited during decision making in older relative to younger adults and several experimental conditions test the influence of cognitive control mechanisms on the Positive-Skew bias. The project tests interventions targeting cognitive control to reduced bias.