Humans Can Adopt Optimal Discounting Strategy under Real-Time Constraints
Figure 1
Hyperbolic and Exponential Reward Discounting Models
(A) Hyperbolic versus exponential reward discounting models as a function of the delay to the reward for two different sets of steepness parameters. The hyperbolic model has an initial steep decay followed by a flatter “tail”; thus, delayed rewards are less discounted with hyperbolic models than with exponential models.
(B) Preference reversal, which is commonly observed in humans and animals, is predicted by the hyperbolic model and is due to a decrease in the decay rate as the delay increases. Initially (at time 0), the large reward has a higher value than the small reward, and is therefore preferred. As the small reward draws near, the preference shifts to the small reward. The exponential model, which has a constant decay rate, does not predict preference reversal.