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.
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?
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.
Hyperbolic discounting describes how we value a reward less the further away it is — but not at a steady rate. We discount the near future very steeply and the far future much more gently. That uneven curve is why $100 today can feel far more tempting than $110 next week, while $100 in a year versus $110 in a year and a week barely moves us, even though both are a one-week wait for the same extra $10. The result is present bias: plans that look sensible when every option is distant get overturned the moment one becomes immediate. Someone who firmly means to start saving next month may, when next month arrives, again prefer to spend now and start "next month". Economists contrast this with exponential discounting, where the rate is constant and today's plan and tomorrow's choice always agree. Hyperbolic discounting helps explain procrastination and impulse spending — and why commitment devices such as automatic savings, deadlines, or locking away a treat work so well: they remove the tempting immediate option before present-you can grab it.
In the simulation you choose between a smaller reward sooner and a larger reward later — first when both are far off, then when the sooner option becomes available now. Watching your own choice flip as the delay shrinks, even though the trade-off is unchanged, makes present bias something you feel rather than just read about.