Hyperbolic Discounting
People tend to choose smaller, immediate rewards over larger, later rewards.Description
Hyperbolic discounting is a cognitive bias where individuals prefer smaller, immediate rewards to larger, delayed ones. This model explains why people often opt for immediate gratification, even when waiting would yield a better outcome. This behavior is contrary to the "rational" choice model in economics and highlights the human tendency to disproportionately value the present over the future. Understanding this bias can help in making more rational long-term decisions, such as saving for retirement or maintaining healthy habits.
Examples
Choosing to spend money on a luxury item now rather than saving it for a larger purchase or investment in the future.
Opting for an unhealthy snack for immediate satisfaction, despite long-term health goals.