Using Simulation-Based Interventions to Improve Financial Decision-Making in Adolescents

Abstract

This study examines whether interactive simulations can reduce common behavioral biases, such as present bias, loss aversion, and overconfidence, in adolescent financial decision-making. Using CapGrowth, a decision-science platform built specifically for this research, 150 participants aged 13 to 18 completed repeated simulation trials targeting these cognitive biases. Rather than teaching rigid strategies or financial concepts, the platform introduced outcome visualizations after initial choices to show participants the long-term impact of their actions. The results demonstrated that experiential learning directly improves decision quality. Impulsive choices driven by present bias dropped from 68% to 42%, while risky decisions stemming from overconfidence decreased from 62% to 45%. Participants also showed increased decision times, indicating deeper cognitive reflection, and their self-reported confidence aligned much more closely with actual decision accuracy by the final trial. Overall, the findings suggest that non-prescriptive, simulation-based tools offer a highly effective way to complement traditional financial education and improve real-world economic behaviors in young people.