What does hyperbolic discounting imply about the benefits of a decision over time?

Hyperbolic discounting is a concept from behavioral economics that illustrates how individuals perceive the value of rewards over time. It suggests that people tend to place disproportionately higher value on immediate rewards compared to future rewards. This means that as the time to receive a reward increases, its perceived value decreases more than it would under linear models of discounting.

Therefore, when considering benefits associated with decisions or rewards that are delayed, hyperbolic discounting implies that these benefits decrease in value as the delay lengthens. The psychological tendency to favor immediate gratification leads to diminishing value for rewards that are not immediately available, thus aligning with the notion that the benefits decrease over time.

This understanding can greatly impact decision-making processes, especially in areas such as health, finance, and personal goal setting, where individuals may struggle to maintain motivation for future benefits because those benefits seem less valuable due to the influence of hyperbolic discounting.