ABSTRACT
An important concept in behavioral economics is examining how people make decisions over time. This chapter provides an understanding of people's decisions in circumstances in which some of the rewards or costs of a choice accrue in the future. It represents the individual's willingness to give up current consumption in exchange for future consumption. Choice over time has an uncontroversial normative principle. This chapter reviews several implications of the hyperbolic discounting. Decision making can be described from two frames of mind: local and global. The chapter shows that the combination of individual and environmental forces influence the host of vulnerability for temporal discounting. Cognitive development is essential for information processing, learning, and decision making. The prevalence of substance abuse, overeating, criminal behavior and many other types of risky behavior is higher in urban and low socioeconomic-status (SES) residential environments. Delay discounting is associated with the affective environment in early childhood development.
