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So you suck at delayed gratification? Can’t consistently invest your savings for the big pay off for when you retire? Or perhaps you’re ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Beatus sibi videtur esse moriens. Cum autem in quo sapienter dicimus, id a primo rectissime dicitur. Non quaeritur autem quid naturae tuae consentaneum sit, sed quid disciplinae. Bork Duo Reges: constructio interrete. Non est ista, inquam, Piso, magna dissensio.
Nam, ut sint illa vendibiliora, haec uberiora certe sunt. Quod non faceret, si in voluptate summum bonum poneret. Duarum enim vitarum nobis erunt instituta capienda. Modo etiam paulum ad dexteram de via declinavi, ut ad Pericli sepulcrum accederem. Quis enim potest ea, quae probabilia videantur ei, non probare? Quare hoc videndum est, possitne nobis hoc ratio philosophorum dare. Post enim Chrysippum eum non sane est disputatum. Nihil opus est exemplis hoc facere longius.
Scaevola tribunus plebis ferret ad plebem vellentne de ea re quaeri. Scio enim esse quosdam, qui quavis lingua philosophari possint; Cur haec eadem Democritus? Non enim iam stirpis bonum quaeret, sed animalis. Deinde disputat, quod cuiusque generis animantium statui deceat extremum. Respondent extrema primis, media utrisque, omnia omnibus.
- For decisions, use slow thinking to interrupt your bias.
Organise processes or teams to interrupt ...
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Neque enim civitas in seditione beata esse potest nec in discordia dominorum domus; In quibus doctissimi illi veteres inesse quiddam caeleste et divinum putaverunt. Claudii libidini, qui tum erat summo ne imperio, dederetur. Cum autem in quo sapienter dicimus, id a primo rectissime dicitur. Quam ob rem tandem, inquit, non satisfacit? Te enim iudicem aequum puto, modo quae dicat ille bene noris.
Duo enim genera quae erant, fecit tria. Saepe ab Aristotele, a Theophrasto mirabiliter est laudata per se ipsa rerum scientia; Qui-vere falsone, quaerere mittimus-dicitur oculis se privasse; Bestiarum vero nullum iudicium puto. Hoc enim constituto in philosophia constituta sunt omnia. Nec enim, omnes avaritias si aeque avaritias esse dixerimus, sequetur ut etiam aequas esse dicamus. Traditur, inquit, ab Epicuro ratio neglegendi doloris. At tu eadem ista dic in iudicio aut, si coronam times, dic in senatu. An vero displicuit ea, quae tributa est animi virtutibus tanta praestantia? Illum mallem levares, quo optimum atque humanissimum virum, Cn. Quis animo aequo videt eum, quem inpure ac flagitiose putet vivere?
Some criticise the evidence behind Hyperbolic Discounting as, similar to so many behavioural science research, largely relying on university students as they are a cheap and available group of test subjects. Such critics argue that more experienced and older people consider longer views and criteria for their decision making, though this has not been proven through research yet.
Other criticisms do not undermine the observed behaviour behind Hyperbolic Discounting — of people choosing instant gratification — rather the reasoning behind it. So, for example, some point to the role of cravings, arousal and emotions in people seeking immediate rewards — though again, in my view this is relatively academic as the end result remains the same.
$100 versus $120.
Hyperbolic discounting is perhaps best known for the $100 versus $120 experiment. Participants in this experiment were offered a choice between receiving $100 today versus $120 in a week. Most people would choose the $100 immediately. Then they were offered the choice between $100 in a year versus $120 in a year and a week. From a rational perspective, these questions are identical — yet when adding the ‘year’, most people chose to take the $120 option.
Climate change.
This one’s a bit opinionated perhaps, but is it really? It is now pretty clear that climate change is a massive threat to humanity — there, I said it. Yet humans are reticent to act. Compare that to how most governments invested in dealing with the threat of covid when it was having clear immediate impacts. The immediate threat gets the attention, the distant one can be all too easily ignored.
Hyperbolic discounting is a core model in behavioural economics and has countless implications.
Use the following examples of connected and complementary models to weave hyperbolic discounting into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above.
Connected models:
- Fast and slow thinking: the model that explains the broader backdrop of heuristics and behavioural economics.
- Loss aversion: another fundamental and intrinsically linked model
Complementary models:
- Habit loop: particularly B.J. Foggs idea of ‘tiny habits’ or immediate rewards.
- Systems versus goals: in establishing the routine over relying on a distant goal.
- Divide and conquer: in respect to breaking down large projects.
- Cialdini’s six principles of persuasion: particularly in terms of freemium and quick value in relation to reciprocity.
Hyperbolic discounting was built on the work of Richard Hernstein who developed a ‘matching law’ before coining the term ‘hyperbolic discounting’ in a 1961 paper.
My Notes
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