Behavioral Economics · intermediate
What moves on the Hyperbolic Discounting & Present Bias diagram
Commitment devices bind the future self, flattening effective discountingdiscountingConverting future values into today's terms, because a dollar later is worth less than a dollar now. toward time-consistency.
Sophisticated agents KNOW their future self will defect.
So they lock the choice now, auto-savings, deadlines, gym contracts. Effective impatience falls.
The curve lifts toward the exponential benchmark: commitment devices are how present-biased people buy consistency.
Examiners ask this as: commitment device saving, locking future self.
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