Back to the Present Bias

View Sample PDF

Author(s): Orhan Erdem (Rockford University, USA)and Melis Dik (Johns Hopkins University, USA)
Copyright: 2021
Pages: 12
Source title: Behavioral-Based Interventions for Improving Public Policies
Source Author(s)/Editor(s): Viorel Mihaila (University of Bucharest, Romania)
DOI: 10.4018/978-1-7998-2731-3.ch007

Keywords: Business Science Reference / Government & Law / Policy & Reform / Public and Sector Management

Purchase

View Back to the Present Bias on the publisher's website for pricing and purchasing information.

Abstract

Much of the economic theory in the beginning of the 20th century assumes that people's tastes and preferences are invariant throughout time. However, recent studies show that this assumption cannot be supported by experiments. Humans are more inclined to present outcomes than future ones. Economists name this as present bias, which can formally be defined as the undervaluing of a larger, later reward and the preference for a smaller, sooner reward. Present bias has been considered a crucial element of economic/financial decision-making processes and it is shown to be related to various suboptimal outcomes. Here, the chapter per the authors summarizes several definitions of present bias, reviews the literature on present bias and behavioral based interventions. The chapter points out the importance and the relevance of some recent studies that stand out, as well as their implications for our day-to-day lives and how we can combat present bias.

The IRMA Community

Research IRM

Back to the Present Bias

Purchase

Abstract

Related Content

IRMA Sponsors