Hyperbolic discounting - The Decision Lab
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Hyperbolic discounting refers to the tendency to value immediate though smaller rewards more than long-term larger rewards.
Why do we value immediate rewards more than long-term rewards? Hyperbolic discounting is our inclination to choose immediate rewards over rewards that come later in the future, even when these immediate rewards are smaller. CategorySpeed Reading time14 min read Where this bias occurs Consider the following hypothetical: John buys a lottery ticket every week. He hopes to someday win big. One fortunate day, against all odds, he does. John is now worth just over $5 million. After a frenzy of celebrations and hugs, John drives to the lottery offices to claim his prize. When he arrives, the…
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