It's a cognitive bias, where people choose smaller, immediate rewards rather than larger, later rewards.
For example, if there’s an important deadline looming (the pressure is on, all signs are pointing to you getting it done), yet you put it off, turn on Netflix, and fantasize about how you’re going to crush it tomorrow, you’ve fallen victim to hyperbolic discounting.
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They are mental shortcuts we use, which generally help us make quick decisions, but don’t always work out for the best.
Our brains were never wired to be truly rational because there is way too much information in the world for us to process. We evolved instead to make decisions quickly.
Is the tendency to over-value the effect of small quantitative differences when comparing options.
For example: we think a 1,200 square foot home will make us happier than a 1,000 square foot home. We think earning $70,000 a year will make us happier than earning $60,000 a year.
Mostly encountered in when we are in the situations of buying something new.
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