Hyperbolic versus exponential discounting

The red lines show hyperbolic discounting. The green lines show exponential discounting (constant discount rate).

Present Value (PV)
Time
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Sensitivity (hyperbolic)

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Discount rate (exponential)

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Discount Rate
Time
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Creative Commons License

This page by Martin Poulter of the Economics Network is released under a Creative Commons Attribution licence.

See also Hyperbolic discounting and preference reversal