Frequency Illusion: Definition, Examples and Effects

Hyperbolic discounting is a phenomenon in which people prefer smaller, immediate rewards over larger, delayed rewards. It is a form of temporal discounting, which is the tendency to prefer rewards sooner rather than later. This phenomenon is often seen in decision-making, where people are more likely to choose a smaller reward that is available immediately, rather than a larger reward that is available in the future.

Definition: Hyperbolic discounting is a form of temporal discounting in which people prefer smaller, immediate rewards over larger, delayed rewards. It is a phenomenon in which people are more likely to choose a smaller reward that is available immediately, rather than a larger reward that is available in the future.

Examples: Hyperbolic discounting can be seen in everyday life. For example, someone may choose to buy a candy bar now rather than save up for a larger purchase, such as a new laptop, in the future. Another example is when someone chooses to watch a movie now rather than wait for a better movie to come out in the future.

Effects: Hyperbolic discounting can have a negative effect on decision-making. People may make decisions that are not in their best interest, such as spending money on items that are not necessary or choosing to watch a movie now rather than wait for a better one to come out in the future. Additionally, hyperbolic discounting can lead to procrastination, as people may choose to put off tasks that have a larger reward in the future in favor of tasks that have a smaller reward now.

Do you want to expand your knowledge on this topic? Read our full in-depth article on cognitive biases.

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