Getting Older Isn't All That Bad: Better Decisions and Coping When Facing "Sunk Costs"

Article · September 2014with382 Reads
DOI: 10.1037/a0036308
Abstract
Because people of all ages face decisions that affect their quality of life, decision-making competence is important across the life span. According to theories of rational decision making, one crucial decision skill involves the ability to discontinue failing commitments despite irrecoverable investments also referred to as ‘sunk costs.’ We find that older adults are better than younger adults at making decisions to discontinue such failing commitments especially when irrecoverable losses are large, as well as at coping with the associated irrecoverable losses. Our results are relevant to interventions that aim to promote better decision-making competence across the life span.
    • Neurally, older adults show equivalent activity in the nucleus accumbens (which processes reward) for both immediate and delayed rewards, while young adults show greater activity for immediate relative to future rewards [109,110]. Finally, older adults' experiences likely contribute to their reduced susceptibility to the sunk-cost fallacy; relative to young adults, older adults are better at making decisions to discontinue failing commitments when prior investments have been made [111,112]. Taken together, these studies suggest that older adults' extended knowledge or " wisdom " may support decision-making that relies on prior experience. Given that real world decisions rarely occur in isolation and often depend on past experiences, older adults may be better equipped than young adults to make such decisions.
    [Show abstract] [Hide abstract] ABSTRACT: Cognitive control, the ability to limit attention to goal-relevant information, aids performance on a wide range of laboratory tasks. However, there are many day-to-day functions which require little to no control and others which even benefit from reduced control. We review behavioral and neuroimaging evidence demonstrating that reduced control can enhance the performance of both older and, under some circumstances, younger adults. Using healthy aging as a model, we demonstrate that decreased cognitive control benefits performance on tasks ranging from acquiring and using environmental information to generating creative solutions to problems. Cognitive control is thus a double-edged sword – aiding performance on some tasks when fully engaged, and many others when less engaged.
    Full-text · Article · Nov 2016
    • Existing research strongly suggests that age-related changes in the cognitive system influence preferential choice. While the reduction of fluid cognitive ability can lead to sub-optimal decision outcomes (Finucane et al., 2000), experience garnered during one's lifespan can also improve one's decision making (Mata et al., 2007; Bruine de Bruin et al., 2014). How can research on aging and decision making explain such mixed results?
    [Show abstract] [Hide abstract] ABSTRACT: Existing research strongly suggests that age-related changes in the cognitive system influence preferential choice. While the reduction of fluid cognitive ability can lead to sub-optimal decision outcomes (Finucane et al., 2000), experience garnered during one's lifespan can also improve one's decision making (Mata et al., 2007; Bruine de Bruin et al., 2014). How can research on aging and decision making explain such mixed results? A reasonable approach is to adhere to a clear definition of optimality in choice behavior, which must be grounded in principles of cognitive psychology. Indeed, this approach has led many researchers to identify distinct cognitive processes that may be responsible for suboptimal decisions among older adults. Among many, these include memory (Buckner, 2004), perception (Schneider and Pichora-Fuller, 2000), and executive functions (Schiebener and Brand, 2015).
    Full-text · Article · Aug 2016
    • It has been suggested that within and between-subjects designs may elicit different decision-making processes (Kahneman, 2000; Klaczynski, 2001). Prior research using a within-subjects design found that coping through rumination avoidance statistically accounted for age differences in decisions when the irrecoverable investment was large, but not when it was small (Bruine de Bruin et al., 2014). In the between-subjects design we used, participants were not presented with a version of the scenario with a smaller loss.
    [Show abstract] [Hide abstract] ABSTRACT: We tested interventions to reduce “sunk-cost bias,” the tendency to continue investing in failing plans even when those plans have soured and are no longer rewarding. We showed members of a national U.S. life-span panel a hypothetical scenario about a failing plan that was halfway complete. Participants were randomly assigned to an intervention to focus on how to improve the situation, an intervention to focus on thoughts and feelings, or a no-intervention control group. First, we found that the thoughts and feelings intervention reduced sunk-cost bias in decisions about project completion, as compared to the improvement intervention and the no-intervention control. Second, older age was associated with greater willingness to cancel the failing plan across all three groups. Third, we found that introspection processes helped to explain the effectiveness of the interventions. Specifically, the larger reduction in sunk-cost bias as observed in the thoughts and feelings intervention (vs. the improvement intervention) was associated with suppression of future-oriented thoughts of eventual success, and with suppression of augmentations of the scenario that could make it seem reasonable to continue the plan. Fourth, we found that introspection processes were related to age differences in decisions. Older people were less likely to mention future-oriented thoughts of eventual success associated with greater willingness to continue the failing plan. We discuss factors to consider when designing interventions for reducing sunk-cost bias.
    Article · Aug 2016
    • For example, decision may induce very strong emotions that may need to be regulated if they are not to have a disruptive effect on the decision making process (Castellanos et al., 2006). The importance of emotions in determining decision biases has already been shown to be crucial in sustaining the sunk cost bias (Bruine deBruin et al., 2014). Developing interventions that support emotion regulation competencies may provide a very different but equally effective approach to helping people make better everyday decisions in situations that induce strong emotions.
    [Show abstract] [Hide abstract] ABSTRACT: Two prescriptive approaches have evolved to aid human decision making: just in time interventions that provide support as a decision is being made; and just in case interventions that educate people about future events that they may encounter so that they are better prepared to make an informed decision when these events occur. We review research on these two approaches developed in the context of supporting everyday decisions such as choosing an apartment, a financial product or a medical procedure. We argue that the lack of an underlying prescriptive theory has limited the development and evaluation of these interventions. We draw on recent descriptive research on the cognitive competencies that underpin human decision making to suggest new ways of interpreting how and why existing decision aids may be effective and suggest a different way of evaluating their effectiveness. We also briefly outline how our approach has the potential to develop new interventions to support everyday decision making and highlight the benefits of drawing on descriptive research when developing and evaluating interventions.
    Full-text · Article · Jan 2016
    • Older adults' decisions about sunk costs are less motivated by past losses than those of younger adults (Strough, Schlosnagle, & DiDonato, 2011 ). Moreover, instead of engaging in unproductive rumination about irretrievable past losses, older adults choose to use action-oriented coping strategies (Bruine de Bruin, Strough, & Parker, 2014). Similarly, among people younger than 50, those who are motivated to promote gains ( " promotion focus " ) are better at ignoring sunk costs compared to those who are motivated to prevent loss ( " prevention focus " ; Molden & Hui, 2011).
    [Show abstract] [Hide abstract] ABSTRACT: In this chapter, we orient the reader to the emerging field of aging and decision making portrayed in this edited volume. We trace recent progress made in addressing issues identified by the National Research Council (2000, 2006) in three general areas: neurobiological mechanisms, behavioral mechanisms (including cognition, affect, and motivation), and applied perspectives that address decision making in specific contexts of everyday life. We then provide an overview of each of the chapters in the volume and highlight how each contributes to advances in current knowledge of aging and decision making.
    Chapter · Dec 2015 · Journal of Behavioral Decision Making
    • Indeed, age-related declines in working memory and fluid abilities are more likely to affect tasks requiring explicit learning of complex rules or intensive monitoring and effortful learning of many options as compared with tasks relying more on implicit or low-effort learning processes (Del Missier et al., 2015; Frey, Mata, & Hertwig, 2015; Mata, Josef, Samanez-Larkin & Hertwig, 2011). It should be noted, however, that working memory may not be as relevant for decision tasks that rely less on fluid abilities and more on consolidated knowledge (Del Missier et al., 2013; Li et al., 2013 Li et al., , 2015), more on episodic memory (Del Missier et al., 2013; Hoffmann, von Helversen, & Rieskamp, 2014) or emotion-related processes (Bruine de Bruin, Strough & Parker, 2014; MacPherson et al., 2002). Indeed, decision-making tasks may vary in the extent to which they rely on different processes, some of which may decline with age, while others stay the same or even improve (Strough Parker & Bruine de Bruin, 2015).
    [Show abstract] [Hide abstract] ABSTRACT: Age-related differences in sensory functioning, processing speed, and working memory have been identified as three significant predictors of the age-related performance decline observed in complex cognitive tasks. Yet, the assessment of their relative predictive capacity and interrelations is still an open issue in decision making and cognitive aging research. Indeed, no previous investigation has examined the relationships of all these three predictors with decision making. In an individual-differences study, we therefore disentangled the relative contribution of sensory functioning, processing speed, and working memory to the prediction of the age-related decline in cognitively demanding judgment and decision-making tasks. Structural equation modeling showed that the age-related decline in working memory plays an important predictive role, even when controlling for sensory functioning, processing speed, and education. Implications for research on decision making and cognitive aging are discussed.
    Article · Dec 2015
Show more
Project
Understand the cognitive underpinnings of age-related changes in judgment and decision making.
Article
    Paper presents a conceptual framework that extends Barbuto's (2000) influence model. The original influence trigger model included reward-based, relationship-based, and values- based derivations to explain follower compliance using target motivation, agent bases of power, and target resistance as moderators. The proposed extension includes locus of control as a salient variable that moderates... [Show full abstract]
    Article
    February 2011 · Marketing Letters · Impact Factor: 1.06
      The current research shows that the persuasive impact of messages can be maximized if their framing is matched to where target consumers are in their decision making process at the time they evaluate the message. Results from two experimental studies show that consumers who are in the predecisional phase of decision-making are more likely to be persuaded by messages framed using... [Show full abstract]
      Article
        Typescript. Thesis--University of Iowa, 1978. Bibliography: leaves 230-238.
        Article
        March 1999 · Australian family physician · Impact Factor: 0.71
          Article
            Abstract. Thesis--Louisiana State University, Baton Rouge, 1978. Vita. Bibliography: leaves 123-127. Microfiche. s
            Discover more