Discounting of Future Returns
The decrease of perceived value of a particular item as time passes.
All types of organisms are constantly making choices throughout their lives. Some of these choices are simple, with one alternative clearly better than the other. However, other choices that must be made are less clear-cut. When human beings and other organisms make decisions, how do they actually analyze and decide between two alternatives? When faced with the choice between two items that differ only on one factor, individuals should pick a larger value over a smaller value, a reward available sooner over a reward available later, and a more certain reward over a less certain reward (Green and Myerson 2004). These are the basics that determine how organisms make the best possible choices. Nevertheless, this only explains one simple type of choice; in reality, most choices are much more complex and differ on many factors. When multiple...
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