025Bias
Hyperbolic Discounting
A cognitive bias which explains why people prefer smaller, immediate rewards rather than larger rewards in the future.
Why it matters
People are naturally impatient, and despite being good at planning for the future, are usually terrible at making decisions that sacrifice today for tomorrow.
• Choosing to eat junk food today, rather than focusing on long term health. • Spending $100 today, rather than saving and investing that cash. • Opting for a $100 reward today, rather than a $120 reward in a week.
It's one of the reasons why payday loans are so effective—people can spend now .
The present value of the reward is being discounted in a trend that follows a mathematical curve called a "hyperbola".
Churn:
• If the value of your app is very long term (e.g., investing, life insurance) you're constantly fighting people's short term preferences (i.e., seeing the cash leave their account, that they could be spending).
What to inspect
- Check whether the experience reflects this: Choosing to eat junk food today, rather than focusing on long term health.
- Check whether the experience reflects this: Spending $100 today, rather than saving and investing that cash.
- Check whether the experience reflects this: Opting for a $100 reward today, rather than a $120 reward in a week.
- Check whether the UI still supports this: If the value of your app is very long term (e.g., investing, life insurance) you're constantly fighting people's short term preferences (i.e., seeing the cas…
Common anti-patterns
- Assuming users consciously notice every place where "A cognitive bias which explains why people prefer smaller, immediate rewards rather than larger rewards in the future" could apply.
- Dense copy and parallel actions that increase mental effort unrelated to the user’s goal.
- Ignoring downstream effects on churn when shipping this pattern.
Critique prompts
- Choosing to eat junk food today, rather than focusing on long term health.
- Spending $100 today, rather than saving and investing that cash.
- Opting for a $100 reward today, rather than a $120 reward in a week.
- If the value of your app is very long term (e.g., investing, life insurance) you're constantly fighting people's short term preferences (i.e., seeing the cash leave their account, that they could be spending).
- Where on this screen would "Hyperbolic Discounting" show up as friction or misunderstanding?
- What would a first-time user misunderstand here in under five seconds?