Have you ever been on a healthy diet, then been on the couch watching T.V and you suddenly get a craving for chips and you start to seriously contemplate getting said chips? Have you ever set your alarm clock wanting to get up at a decent time, yet when the alarm goes off, you shut it off and sleep just a little longer?
These examples, among uncountable others, operate under a hyperbolic discount function of simple ambivalence. What that means is that you firstly have two choices that are essentially clean-cut. You either get chips or you don’t. You either get up for the day or you sleep. This is simple ambivalence.
The second problem in these situations is the hyperbolic discount rate. We all place value on certain alternatives whether it be eating badly or eating healthy. In the long term, most of us can agree that eating healthy is far more rewarding, yet almost all of us give in to our cravings once and a while. This is because the hyperbolic discounting (getting pleasure from food immediately) becomes more valuable than the overall slowly occurring value of long-term health.
This preference of reversals can be calculated by the discount function below.
Hyperbolic Discount Rate (for the math lovers)
v = V/kD, where V is undiscounted value, k is a constant degree of discounting, and D is the time of Delay.
In situations where k is quite low, preference reversal such as clicking the snooze button, will never occur. Even with Delay being as low as possible (there is no delay), if k is low enough then a person will always choose the higher value route. Consider a person who likes both pill A and pill B (which both create happiness) but pill A is far better than Pill B (which lets say causes intense diarrhea). The person will always seek Pill A even if Pill B is immediately available.
As mentioned above, to regurgitate information, delay, as it lowers, makes the v (overall discounted value) higher. If k ( a difference of opinion between option one and option two where one is valued higher than the other ) isn’t inversely low enough, than preference reversal can occur.
Two paragraphs up I mentioned that clicking the snooze button is a preference reversal over past objective values. Whether a person presses the snooze button is determined on variables (within simple ambivalence) such as how tired they are and how close the alarm clock is to their bed. As a person is already refreshed and wants to get up (k is low), they will not click the snooze button even if it is within reaching distance. Commitments such as moving the alarm clock (increasing Delay to value of Sleep) can help convert the equation so the v is always chosen of the better long-term choice of getting up, in theory. However, if a person is SUPER tired, even if the delay (moving the alarm clock across the room) is high, they may very well still press the snooze and walk back to bed to sleep.
For the chip problem, it operates under the same domain. I love ketchup chips personally and I find it very hard to not cave to my craving of them at least once a week. When it comes time that I have a craving, I always consider a couple things that contribute to the hyperbolic equation. I first consider whether I have been good with my money for the week and whether I deserve it in that regards and how much effort it would take to get the chips (defining k) and how long it would take to finally be eating the chips. If I have chips at my place already, there is no doubt in my mind that I will eat them as K is high and D is low. If the chips are a block away for 1.50 for a small bag, then I will consider it as k is moderate and D is moderately low. If I think I have been bad with my money (low k) and I shouldn’t go to the convenient store where they have high prices, I always consider going to the actual store to get a big bag for 3.00 which offers much more than double the amount of chips. However, I often never take this route as D is far too high. * This may seem like a lot of mental work but these occurrences are quickly happening within a minute of thinking about it within my mind.
^Considering this example however, most times I will get the bag of chips if the craving is strong enough. I can make many excuses and rationalization to achieve this. Some such rationalizations include “I worked out yesterday” or “I worked an extra hour at work”. It depends on many more variables than just a basic k and D discount rate.
This is where I will lead next into more complex ambivalence where choices, typically the long-term values, are less clearly defined and more difficult to put to a specific value and where making rationalizations can lead to impulsive decisions.
I challenge you: Consider some of these simple ambivalence situations when they occur. Often times, you will know that the myopic choice is wrong and that you should stick to your long-term goals, yet you wont. However, if you record these occurrences, they may halt your impulsive actions. Recording them is one ‘trick’ to solving this myopic dilemma (which I will discuss in a different post).