We choose smaller, more immediate rewards over greater ones that we need to wait for
Would you prefer $100 now or $120 in a year? But what about $100 in 4 years or $120 in 5? Despite the same time gap, did your choices differ?
Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.
The study
Business case
The study
The studies
36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.
All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.
Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.
Jerome's Expert View
Key Takeaways
Embrace the power of now.
Immediate gains are valued more greatly than those far off. Similarly, far-off costs seem less painful. Amazon heighten the immediate gain by taking a hit now, for longer term business payoff.
Where in your business can you capitalize upon 'the now'?
Prevent impulsive financial or health decisions by:
• Reframing future rewards around time (by stating a specific date) or by surfacing the painful zero outcomes of short-term choices (Wu & He, 2012).
• Goal Priming. Painting a vivid, personal, emotional picture of someone's future reality will boost their ability to make longer-term decisions now.
Dissuade from inferior choices today with a lock-in for tomorrow
This is when a choice now locks in a set of future inferior outcomes, aggregating any gains and forcing a stronger consideration of less impulsive choices.
Boundary conditions
Future questions
We choose smaller, more immediate rewards over greater ones that we need to wait for
Would you prefer $100 now or $120 in a year? But what about $100 in 4 years or $120 in 5? Despite the same time gap, did your choices differ?
Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.
The study
Business case
The study
36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.
All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.
Jerome's Expert View
Key Takeaways
Embrace the power of now.
Immediate gains are valued more greatly than those far off. Similarly, far-off costs seem less painful. Amazon heighten the immediate gain by taking a hit now, for longer term business payoff.
Where in your business can you capitalize upon 'the now'?
Prevent impulsive financial or health decisions by:
• Reframing future rewards around time (by stating a specific date) or by surfacing the painful zero outcomes of short-term choices (Wu & He, 2012).
• Goal Priming. Painting a vivid, personal, emotional picture of someone's future reality will boost their ability to make longer-term decisions now.
Dissuade from inferior choices today with a lock-in for tomorrow
This is when a choice now locks in a set of future inferior outcomes, aggregating any gains and forcing a stronger consideration of less impulsive choices.
Boundary conditions
Future questions
Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.
We choose smaller, more immediate rewards over greater ones that we need to wait for
Would you prefer $100 now or $120 in a year? But what about $100 in 4 years or $120 in 5? Despite the same time gap, did your choices differ?
The study
36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.
All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.
Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.
Scarcity
We value things more when they’re in limited supply
Social Proof
We copy the behaviors of others, especially in unfamiliar situations
Prospect Theory
A loss hurts more than an equal gain feels good
Reciprocity
We’re hardwired to return kindness received
Framing
We make very different decisions based on how a fact is presented
Loss Aversion
We feel more negative when losing something than positive when we gain it
Self-Expression
We constantly seek out ways to communicate our identity to others
Default Effect
We tend to accept the option pre-chosen for us
Priming
Our decisions are shaped by memories recalled from things just seen or heard
Anchoring
What we see first affects our judgement of everything thereafter