Understanding Present Bias: The Impact of Temporal Preferences on Decision-Making and Behavior

Introduction

Present bias, a concept rooted in behavioral economics, refers to the tendency of individuals to favor immediate rewards over future benefits, even when the latter may be significantly more advantageous. This phenomenon is particularly relevant in understanding decision-making and behavior across a variety of contexts, including personal finance, health, and environmental sustainability. The purpose of this report is to explore the implications of present bias on individual choices and to examine how an understanding of this cognitive bias can inform strategies to promote better decision-making. By analyzing empirical evidence and theoretical frameworks, this report aims to elucidate the mechanisms behind present bias and its effects on behavior.

Main Body

Present bias can be understood through the lens of hyperbolic discounting, a model that posits individua