Hyperbolic Discounting and Human Behaviour

The Marshmallow Experiment was done at Stanford University in the 1960s, whereby a group of four year olds were given an extra marshmallow provided they could wait 20 minutes before eating the first one. The children who could wait demonstrated better SAT scores years later. This attribute is also known as delayed gratification, deferred gratification or impulse control or self-control. Accounting-wise, people should calculate NPV of future rewards and defer near-term rewards of lesser value. Humans don't do this, they tend to use "hyperbolic discounting" whereby valuations fall very rapidly for periods of small delays. Everyone prefers a dollar today to a dollar tomorrow, but what about a dollar today or two dollars tomorrow? Hyperbolic discounting would be using a discount function = 1 / (1 + kD) where k is the "discount rate", and D is the delay. Going against this instinct is the domain of impulse control. Good impulse control, psychological research suggests, may be important for academic and life success.