1 Department of Psychology, Concordia University, 7141 Sherbrooke Street W. Montreal, Quebec H4B 1R6, Canada.
2 Chair of Lifespan Developmental Neuroscience, Faculty of Psychology, Technische Universität Dresden, Bürogebäude, Zi. 244 Strehlener Straße 22/24, Dresden 01069, Germany.
3 Center for Adaptive Rationality, Max Planck Institute for Human Development, Lentzeallee 94, Berlin 14195, Germany.
4 Cluster of Excellence "Science of Intelligence", Technische Universität Berlin, Straße des 17. Juni 135, Berlin 10623, Germany.
5 Cluster of Excellence "Centre for Tactile Internet with Human-in-the-Loop", Technische Universität Dresden, Bürogebäude, Zi. 244 Strehlener Straße 22/24, Dresden 01069, Germany.
6 Department of Education and Psychology, Freie Universität Berlin, Habelschwerdter Allee 45, Berlin 14195, Germany.
7 PERFORM Center, Concordia University, 7200 Sherbrooke St. W. Montreal, Quebec H4B 1R6, Canada.

Under high cognitive demands, older adults tend to resort to simpler, habitual, or model-free decision strategies. This age-related shift in decision behavior has been attributed to deficits in the representation of the cognitive maps, or state spaces, necessary for more complex model-based decision-making. Yet, the neural mechanisms behind this shift remain unclear. In this study, we used a modified 2-stage Markov task in combination with computational modeling and single-trial EEG analyses to establish neural markers of age-related changes in goal-directed decision-making under different demands on the representation of state spaces. Our results reveal that the shift to simpler decision strategies in older adults is due to (i) impairments in the representation of the transition structure of the task and (ii) a diminished signaling of the reward value associated with decision options. In line with the diminished state space hypothesis of human aging, our findings suggest that deficits in goal-directed, model-based behavior in older adults result from impairments in the representation of state spaces of cognitive tasks.