>[!abstract] >In economics, hyperbolic discounting is a time-inconsistent model of delay discounting. It is one of the cornerstones of behavioral economics and its brain-basis is actively being studied by neuroeconomics researchers. > >Given two similar rewards, humans show a preference for one that arrives sooner. Humans are said to discount the value of the later reward, by a factor that increases with the length of the delay. In the financial world, this process is normally modeled in the form of exponential discounting, a time-consistent model of discounting. > >Yet, many psychological studies have since demonstrated deviations in instinctive preference from the constant discount rate assumed in exponential discounting. Hyperbolic discounting is an alternative mathematical model that agrees more closely with these findings. > >According to hyperbolic discounting, valuations fall relatively rapidly for earlier delay periods (as in, from now to one week), but then fall more slowly for longer delay periods (for instance, more than a few days). This contrasts with exponential discounting, in which valuation falls by a constant factor per unit delay and the discount rate stays the same. > >Many subsequent experiments 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 (Wikipedia, 2025). >[!related] >- **North** (upstream): — >- **West** (similar): — >- **East** (different): — >- **South** (downstream): —