Asked by c

Kevin has received a $1,000 bonus at work. He can either spend it now on a high-end gaming console or invest it in a savings account to accumulate interest. Kevin is excited about the gaming console and is tempted to purchase it immediately, even though he knows that saving the money could contribute significantly to his college fund over time.

How does present bias affect Kevin's financial decision regarding the bonus?

Kevin invests for future college benefits.
Kevin's decision is unaffected by the console's allure.
Kevin splits the bonus between savings and the console.
Kevin may choose the console for immediate gratification.

All Answers 1

Answered by GPT-5 mini AI
Kevin may choose the console for immediate gratification.

Present bias (hyperbolic discounting) makes people overweight immediate rewards and underweight future benefits, so Kevin is more likely to spend the $1,000 now on the gaming console even though saving would better serve his future college fund.