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In economics, hyperbolic discounting is a time-inconsistent model of delay discounting. It is one of the cornerstones of behavioral economics [ 1 ] [ 2 ] and its brain-basis is actively being studied by neuroeconomics researchers.
In behavioral economics, time preference (or time discounting, [1] delay discounting, temporal discounting, [2] long-term orientation [3]) is the current relative valuation placed on receiving a good at an earlier date compared with receiving it at a later date. [1] Applications for these preferences include finance, health, climate change.
In economics, a discount function is used in economic models to describe the weights placed on rewards received at different points in time. For example, if time is discrete and utility is time-separable, with the discount function f(t) having a negative first derivative and with c t (or c(t) in continuous time) defined as consumption at time t, total utility from an infinite stream of ...
By matching, the subject is equalizing the price of the reinforcer they are working for. This is also called hyperbolic discounting. In making a choice between options, living organisms need not maximize expected payoff as classical economic theory posits.
Therefore, people are biased towards the present. As a result, Phelps and Pollak introduced the quasi-hyperbolic model in 1968. [7] In economics, present bias is therefore a model of discounting. [5] Only when the preference for the present is time inconsistent do we call it biased. [8]
Hyperbolic discounting, where discounting is the tendency for people to have a stronger preference for more immediate payoffs relative to later payoffs. Hyperbolic discounting leads to choices that are inconsistent over time—people make choices today that their future selves would prefer not to have made, despite using the same reasoning. [51]
For a guy who likes ats and invests in them, it hasn't felt good the past two years, but I'm getting to see potential opportunity to talk about mean reversion, as Bill was saying. Bill Mann: They ...
In economics, discounted utility is the utility (desirability) of some future event, ... for example in models which use the concept of hyperbolic discounting.