Separating Risk and Ambiguity Preferences Across the Life Span: Novel Findings and Implications for Policy ⇤

Abstract

We experimentally examine how attitudes toward risk and ambiguity, as well as other properties of the decision-making process such as choice consistency and frequency of dominance violations, change over the life span. We assess all of these characteristics of the decision process, both in the gain and in the loss domain, in a sample of 135 subjects that range in age from 12 to 90 years old. We also collected extensive demographic information and psychological measures that we use as covariates in our analysis. Our results indicate that there is substantial and domain-specific variability across subjects in all parameters with indications of age-related di↵erences in both risk and ambiguity preferences as well as choice consistency and frequency of dominance violations. Several of our findings challenge widely held assumptions about the preferences of representative agents.