The tendency for people to have a stronger preference for more immediate payoffs relative to later payoffs, where the tendency increases the closer to the present both payoffs are. Given two similar rewards, humans show a preference for one that arrives sooner rather than later. Humans are said to *discount* the value of the later reward, by a factor that increases with the length of the delay.

This process is traditionally modeled in form of exponential discounting, a time-*consistent* model of discounting. A large number of studies have since demonstrated that the constant discount rate assumed in exponential discounting is systematically being violated. In behavioral economics, **hyperbolic discounting** is a particular mathematical model devised as an improvement over exponential discounting.

**George Ainslie** pointed out that in a single choice between a larger, later and a smaller, sooner reward, inverse proportionality to delay would be described by a plot of value by delay that had a hyperbolic shape, and that this shape should produce a reversal of preference from the larger, later to the smaller, sooner reward for no other reason but that the delays to the two rewards got shorter. A large number of xperiments have confirmed that spontaneous preferences by both human and nonhuman subjects follow a **hyperbolic curve** rather than the conventional, **exponential** curve that would produce consistent choice over time.

For instance, when offered the choice between $50 now and $100 a year from now, many people will choose the immediate $50. However, given the choice between $50 in five years or $100 in six years almost everyone will choose $100 in six years, even though that is the same choice seen at five years’ greater distance.

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