Suppose a person prefers $100 today to $150 one year from now but prefers $150 in seven years to $100 in six years. This is an example of ____.
A) sunk cost fallacy
B) time inconsistency
C) falling prey to framing effects
D) overconfidence

Question

Quizplus · Accepted Answer

This behavior is an example of time inconsistency, where a person's preferences change over time in a way that is inconsistent with their earlier preferences. In this case, the preference for immediate gratification over a larger future reward does not hold when the same choices are set further in the future.

Suppose a Person Prefers $100 Today to $150 One Year