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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 ...
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Egone non intellego, quid sit don Graece, Latine voluptas? Et quidem illud ipsum non nimium probo et tantum patior, philosophum loqui de cupiditatibus finiendis. Itaque primos congressus copulationesque et consuetudinum instituendarum voluntates fieri propter voluptatem; Ex quo intellegitur officium medium quiddam esse, quod neque in bonis ponatur neque in contrariis. Age nunc isti doceant, vel tu potius quis enim ista melius? Nihil acciderat ei, quod nollet, nisi quod anulum, quo delectabatur, in mari abiecerat. Te enim iudicem aequum puto, modo quae dicat ille bene noris. Ergo, si semel tristior effectus est, hilara vita amissa est?
Iam quae corporis sunt, ea nec auctoritatem cum animi partibus, comparandam et cognitionem habent faciliorem. An vero, inquit, quisquam potest probare, quod perceptfum, quod. Quodsi vultum tibi, si incessum fingeres, quo gravior viderere, non esses tui similis; Sed ille, ut dixi, vitiose. Nihil ad rem! Ne sit sane; Parvi enim primo ortu sic iacent, tamquam omnino sine animo sint.
- For decisions, use slow thinking to interrupt your bias.
Organise processes or teams to interrupt ...
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Iam illud quale tandem est, bona praeterita non effluere sapienti, mala meminisse non oportere? Quid enim me prohiberet Epicureum esse, si probarem, quae ille diceret? Fadio Gallo, cuius in testamento scriptum esset se ab eo rogatum ut omnis hereditas ad filiam perveniret. Piso, familiaris noster, et alia multa et hoc loco Stoicos irridebat: Quid enim? Venit ad extremum; Haec igitur Epicuri non probo, inquam. Consequens enim est et post oritur, ut dixi. Non enim solum Torquatus dixit quid sentiret, sed etiam cur.
Cum id fugiunt, re eadem defendunt, quae Peripatetici, verba. Ergo omni animali illud, quod appetiti positum est in eo, quod naturae est accommodatum. Quodsi vultum tibi, si incessum fingeres, quo gravior viderere, non esses tui similis; Sapientem locupletat ipsa natura, cuius divitias Epicurus parabiles esse docuit. Quam nemo umquam voluptatem appellavit, appellat; Omnes enim iucundum motum, quo sensus hilaretur. Vitiosum est enim in dividendo partem in genere numerare. At iam decimum annum in spelunca iacet. Ita enim vivunt quidam, ut eorum vita refellatur oratio. Tubulo putas dicere?
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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