Or 4. the definition of an older worker is one who won't be overworked and underpaid i.e. more market-aware. Homo Economicus is the limit of an actor as its information about the market approaches infinity; the information asymmetry between IBM and recent college grads is vast, and starts narrowing as that grad ages.

So IBM catches applicants who are making their most rational decisions based on limited information (irrational ones), and fires them when they become more rational. Government regulation attempts to compensate for that.