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Hyperbolic discounting is an alternative mathematical model that agrees more closely with these findings. [5] According to hyperbolic discounting, valuations fall relatively rapidly for earlier delay periods (as in, from now to one week), but then fall more slowly for longer delay periods (for instance, more than a few days).
Present bias is the tendency to settle for a smaller present reward rather than wait for a larger future reward, in a trade-off situation. [1] [2] It describes the trend of overvaluing immediate rewards, while putting less worth in long-term consequences. [3]
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 ...
He explained this in terms of hyperbolic discounting of future rewards, derived from ideas that Rachlin and others had developed from Richard Herrnstein's matching law. Ainslie then integrated these ideas with earlier experimental and theoretical work on inter-temporal choice, for example the studies of Walter Mischel on delay of gratification ...
Thus, it incorporates primary aspects of multiple major theories, including expectancy theory, hyperbolic discounting, need theory and cumulative prospect theory. [1] According to Schmidt, Dolis, and Tolli, Temporal Motivation Theory " may help further the understanding of the impact of time, and particularly deadlines, on dynamic attention ...
Some formulations treat β not as a constant, but as a function β(t) that itself varies over time, for example in models which use the concept of hyperbolic discounting. This view is consistent with empirical observations that humans display inconsistent time preferences .
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]