Knowledge that Transforms

Firms led by older CEOs invest less, but the mechanism behind this age–investment gradient remains unclear. We study how CEO age shapes investment evaluation by eliciting CEOs' ratings of a project's investment attractiveness in a large-scale scenario-based experiment with more than 3700 CEOs from owner-managed Danish firms. Our design provides direct evidence on CEOs' investment evaluations by separating baseline differences in investment attractiveness from sensitivity to risk moments and payout horizon. Each CEO evaluates randomized capital-budgeting scenarios relative to the status quo, allowing us to distinguish a baseline shift in willingness to view projects as compelling from age differences in responsiveness to risk characteristics and payout horizon. We document a pronounced negative association between CEO age and investment attractiveness. Holding expected IRR, variance, skewness, and payout horizon constant, CEOs aged 60 or older rate the same opportunities as less attractive, while age differences in sensitivity to these attributes are weak. Standard stated risk attitudes and a lottery measure show no systematic age pattern. For external validity, we construct a CEO-specific inaction propensity from the experiment—the residual tendency to rate otherwise identical projects as less attractive after accounting for project characteristics—and show that it predicts lower investment in administrative data. Including this measure attenuates the reduced-form age–investment association, suggesting that age-related investment declines are not readily explained by conventional risk preferences or investment horizons alone, but also reflect a broader residual tendency towards lower investment propensity.