EconSim

Hyperbolic Discounting & Present Bias

See why your future self and present self disagree — and how present bias flips a patient plan into an impulsive choice.

Understand why a future self and present self disagree, and how present-biased discounting differs from rational exponential discounting.

  • Exponential vs. hyperbolic discounting
  • Present bias (β-δ)
  • Preference reversal
  • Time inconsistency

Guided walkthrough

Step 1 of 3
Predict first

With present bias on (β = 0.6), look at which reward wins today vs. when the sooner one arrives.

Before you act, predict what will happen. Does the preferred reward change as the sooner one becomes available? Then do it — did your prediction match what happened?

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What each reward feels worth as the sooner one approaches

Solid lines use present-biased (β-δ) discounting; faded dashed lines are the time-consistent exponential benchmark. A crossover of the solid lines is a preference reversal.