It is no revelation that people prefer immediate rewards. What is less

Question

It is no revelation that people prefer immediate rewards. What is less well known is that people are willing to renounce a significant portion of a given reward in order to expedite delivery. This phenomenon is known as “discounting,” because the value of a delayed reward is discounted, or reduced, in the mind of the receiver. Discounting helps explain the straightforward “time value of money” (a dollar now is worth more than a dollar later), but its manifestations can be far more dramatic.

Behavioral economists have identified extreme discounting in experiments in which subjects were offered either a dollar immediately or three dollars the next day. Individuals who consistently choose significantly smaller rewards for their immediacy are described as “present-biased.” Present-bias may seem innocuous, but it has serious ramifications. In another experiment, young children were given a marshmallow, then told that if they could wait a few minutes to eat it, they would receive a second one. Those unable to endure the delay suffered from more behavioral problems in adolescence and scored markedly lower on standardized tests than the children who were able to wait and thereby earn another treat. Traits such as indolence and apathy may indeed be manifestations of present-bias; material success is predicated on one’s ability to recognize hedonistic impulses, understand their consequences, and delay or suppress gratification.

What was once known as “exponential discounting” (because the length of the delay before a reward was given seemed to correlate directly with the size of the perceived discount) has been renamed “ hyperbolic discounting ,” because the effects of time delay do not seem strictly linear. A study showed that people offered $50 now or $100 in a year were likely to choose the former. But when people were offered either $50 in 5 years or $100 in 6 years (the same choice 5 years in the future), the vast majority chose the latter. This experiment reveals the difficulty of making effective financial decisions about one’s future priorities, just as the choice to procrastinate requires the unlikely supposition that one’s future self will have a greater set of resources to accomplish the postponed task than one’s present self.    1 
 1. The function of the second paragraph within the passage may be most appropriately characterized as

(A) analyzing the psychological sources of the phenomenon introduced in the first paragraph
(B) elaborating upon and qualifying the main proposition put forth in the first paragraph
(C) providing an alternative point of view on the positions already established by the author
(D) illustrating one aspect of the phenomenon named in the first paragraph and offering possible social implications
(E) drawing general conclusions about specific examples presented earlier

2 
 2. The passage suggests which of the following about the traits of indolence and apathy?

(A) They are predicated on one’s material success.
(B) They may be regarded as the effects of a tendency toward extreme discounting.
(C) They may be manifested in present-bias.
(D) They may seem innocuous, but they have serious ramifications.
(E) They are the cause of one’s ability to identify and suppress hedonistic impulses.

3 
 3. It can be inferred that the word  hyperbolic  in the phrase “hyperbolic discounting” ( Highlighted ) signifies, in this context,

(A) the nonlinearity in the consequences of various delays
(B) the exaggeration of the effects of time delay
(C) the direct correlation between a delay’s duration and a perceived discount’s magnitude
(D) the exponential growth of the size of the discounting
(E) the lack of certainty in one’s perception of longer and shorter delays

4 
 4. According to the passage, which of the following is true of the children described in the passage who were able to wait to eat their first marshmallow?

(A) They scored lower on standardized tests than children unable to wait.
(B) They suffered more frequently from behavior problems as adolescents.
(C) They each received a second marshmallow as part of the experiment.
(D) They could be characterized as indolent or apathetic.
(E) They can accurately be described as present-biased.

Manhattan GRE 5lb.

Sajjad1994 · Answer

Official Explanation

2. The passage suggests which of the following about the traits of indolence and apathy?

Explanation

Since you learn from the passage,  “Traits such as indolence and apathy may indeed be manifestations of present-bias,”  you are looking for a choice that says more or less the same thing.

Choice (A)  mixes up words from the text (predicated, material success), but definitely does not match the meaning of the passage. The passage says that material success is predicated on the  “ability to recognize hedonistic impulses,”  not that indolence and apathy are predicated on material success. In fact, the passage suggests that indolence and apathy have something to do with a lack of material success.

Choice (B)  is correct but is in disguise. You are looking for manifestations of present-bias, but you have here  “regarded as the effects of a tendency toward extreme discounting.”  The key is that at the beginning of the second paragraph, you have essentially defined  “present-bias”  in terms of  “extreme discounting.”  That is, present-bias is really nothing more than a tendency toward extreme discounting. This disguise makes choice  (B)  tricky.

Regarding  choice (C) , be careful with language! Saying that these traits  “are manifested IN present-bias”  means exactly the reverse of  “are manifestations OF present-bias.”  In the former, the traits are somehow hidden, but they show up IN or THROUGH something on the surface called present-bias. What you are looking for, however, is this: present-bias is the hidden thing. The traits of indolence and apathy are manifestations (demonstrations) of that hidden thing.

Choice (D) , like  choice (A) , mixes up words from the text. Present-bias — not indolence and apathy — is what  “may seem innocuous,”  but have  “serious ramifications.”

Choice (E)  also grabs language from the text but uses it in a mixed-up way. The language  “traits such as indolence and apathy”  shows up in the same sentence as the ability to recognize hedonistic impulses... and delay or suppress gratification, but those two phrases are not connected in an  “X causes Y”  way. If anything, you could infer that these traits and this ability run counter to each other: if you have the latter, you probably won’t have the former.

Answer: B

singhall · Answer

Q3. 
 Lines to refer: What was once known as “exponential discounting” (because the length of the delay before a reward was given seemed to correlate directly with the size of the perceived discount) has been renamed “hyperbolic discounting,” because the effects of time delay do not seem strictly linear.
Ans A

abhishektyga · Answer

Please explain the solution for Q1.

Ilanchezhiyan · Answer

Option D is right because the  Marshmallow example  is the illustration;  apathy and indolence  are the possible social implications. So Option D seems to me the best answer choice.

Sajjad1994 · Answer

OE

1. The function of the second paragraph within the passage may be most appropriately characterized as

Explanation

The first paragraph introduces the phenomenon of  “discounting” : the reduction in the perceived value of a delayed reward. Discounting can account for  “straightforward”  effects such as the time value of money, but  “more dramatic”  manifestations are also hinted at. Some of these dramatic manifestations of  “extreme discounting”  are described in the second paragraph. That paragraph introduces  “present-bias”  by describing two experiments (one in which $1 now is preferred to $3 tomorrow, and another in which children struggle to resist marshmallows). The consequences of the marshmallow experiment are stated and ruminated upon in a larger social context (how present-bias may prevent material success). Thus, the second paragraph elaborates upon a particular, extreme version of the phenomenon introduced in the first paragraph and draws out a few larger implications.

Regarding  choice (A) , the second paragraph does not explain where discounting comes from psychologically.

Regarding  choice (B) , the first paragraph does not really introduce a  “proposition”  per se, which would be a claim of some sort. Rather, the first paragraph simply defines a phenomenon. Additionally, the second paragraph does not  “qualify”  (limit) the first paragraph in any way.

As for  choice (C),  the author has staked out no position in the first paragraph; he or she has only described a phenomenon. The second paragraph does not take an alternative point of view, either.

As for  choice (E),  there are no true “specific examples” introduced in the first paragraph for the second paragraph to draw conclusions from.

Answer: D

Sajjad1994 · Answer

OE

3. It can be inferred that the word    hyperbolic    in the phrase “hyperbolic discounting” (     Highlighted     ) signifies, in this context,

Explanation

This Inference question asks what can be deduced about a particular word,  “hyperbolic,”  as used in the phrase “hyperbolic discounting.” Do not try to figure out the word’s meaning in your head; wrong answer choices have been devised to play off of your possible knowledge of the word “hyperbolic.” Rather, go to the text. The author says that  “‘exponential discounting’ ... has been renamed ‘hyperbolic discounting,’ because the effects of time delay do not seem strictly linear.”  The meaning of  “hyperbolic”  must have to do with this idea, that  “the effects of time delay do not seem strictly linear.”  Only  choice (A)  works. Be careful of  choice (B) —the use of the word hyperbole in everyday speech to mean exaggeration makes this a trap answer.

It is no revelation that people prefer immediate rewards. What is less

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It is no revelation that people prefer immediate rewards. What is less

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