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Behavioral Economics Part 3

Hyperbolic discounting – Given two similar rewards, humans show a preference for one that arrives sooner rather than later.

Would you rather have $50 today or $52 in a week?  Most people would rather have the $50 even though the $52 would be the equivalent of earning 200 percent interest annually. Wow. Would you not want that interest rate?

This explains a lot of things like drug addiction to retirement. If I change the question around, ‘would you rather have $52 in a week or $50 now?’ now if feels like we are losing $2

Instant gratification seems to be the norm these days. Maybe that is the reason some many do not have enough money for retirement. If you are like me, I have to do more planning and less instant gratification.