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Clinical trial evidence shows minimal survival gains and higher complication rates from radical prostatectomy (RP) versus watchful waiting (WW) for elderly men with localized prostate cancer (PCa). It is believed that these patients are overtreated. The current analyses aim to explore patient-level heterogeneity in survival effects, examine matching of patients to treatments in practice, and identify patient characteristics driving heterogenous effects, in order to present more comprehensive evidence about the concerns of overtreatment.Eleven-year all-cause and PCa-specific survival among SEER-Medicare patients diagnosed during 1996–2002 were analyzed using local instrumental variable approaches.A total of 8462 (77%) of 11,036 patients received RP. The average effects of RP over WW on 11-year overall and cancer-specific survival were 1.1 months (95%CI, −25, 28; P=0.94) and 1.7 months (95%CI, −25, 29; P=0.90) respectively; effects did not differ significantly according to age, race, grade, and stage. Fewer than 1% of patients had significant cancer-specific survival benefit from RP at the 10% level; 6% were expected to gain over 15 months from RP. However, patients with larger expected survival gains from RP were much more likely to receive RP in practice. Such positive self-selection was driven by PCa-specific survival than overall survival. Several comorbidities may play a critical role in predicting who could benefit from RP.Our analyses corroborate concerns about PCa overtreatment. A small fraction of screen-detected PCa patients derive survival benefits from RP. Prediction tools should account for patient comorbidities to accurately predict survival benefits of RP over WW.