We tested healthy young and older adults on a simultaneous presentation, letter-matching task that varied letter size. The goal of the experiment was to determine if older adults' higher baseline level of internal noise would affect age differences in letter-matching performance as letter size was varied. The results indicated that both young and older adults evidenced 'fast-same' effects for RT and 'false-different' effects for errors. However, older adults (compared to young adults) showed a larger 'false-different' effect for errors, and this effect was especially pronounced for smaller letter pairs. These results imply that older adults' higher baseline levels of internal noise result in these individuals setting 'compromise criteria' that underestimate the impact of internal noise.