Sustainable finance
Present Bias
The tendency to overvalue immediate rewards relative to future ones, helping explain underinvestment in energy efficiency, health and the environment.
Definition
Present bias is the behavioural tendency to give disproportionate weight to costs and benefits occurring now relative to those occurring later, leading to choices that systematically favour short-term gratification over long-term welfare. Formally modelled through hyperbolic or quasi-hyperbolic discounting, it produces time-inconsistent preferences: people plan to act sustainably tomorrow but repeatedly choose otherwise today.
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