Hyperbolic Discounting

Overview

People discount the near future far more steeply than the distant future, producing dynamically inconsistent preferences: patient choices for next month reverse when next month arrives. Formalized by Laibson's 1997 β-δ model: any future outcome is shrunk by β ≈ 0.7 relative to the present, then discounted exponentially. The fix is structural: commitment devices that bind the future-impatient self — auto-enrollment, forfeits, friction removal, public accountability.

Composes with loss-aversion-prospect-theory, regret-minimization, compound-interest, and okr-goal-setting.

When to Use

• "I'll start tomorrow / next week / next month" has been said multiple times on the same goal
• Savings, investment, or health behaviors are below the person's own stated intent
• Procrastination is the dominant pattern on a recurring task
• Subscriptions, free trials, or "today only" offers are producing unexpected lock-in
• An org fails to execute long-horizon strategy due to short-term firefighting
• A team chases the immediate AI-demo/launch spike over durable moats, evals, and infra — over-discounting long-term reliability amid AI capex, AI valuations, or fast AI adoption pressure

Not when: apparent impatience reflects real new information; discounting is rational due to genuine uncertainty about future receipt; cost of commitment device exceeds benefit.