Question

Tyler got $100 for his birthday. He wants to buy a $100 video game, but he also knows that he could put the money into his savings account. His friends want him to buy the game, so they can play together, but he's undecided because he's saving up for a bike and knows the value of his savings will grow over time.

Which form of cognitive bias is most likely influencing Tyler?

Answer 1

This is present bias (also called hyperbolic or temporal discounting). Tyler is tempted by the immediate enjoyment of the game even though waiting and saving would give greater future value (a better—or more valuable—purchase later). Present bias leads people to overweight immediate rewards relative to larger delayed benefits.