In a scenario where a person must choose between buying a new phone or saving for a vacation, which behavioral economics concept best explains their decision-making process?

The decision-making process in choosing between buying a new phone or saving for a vacation can be explained by the concept of "present bias" in behavioral economics. Present bias means that people often prefer immediate rewards over future benefits, leading them to make choices that satisfy their current desires rather than considering long-term goals. For example, if someone feels excited about the latest phone and believes it will enhance their daily life, they might choose to buy it now instead of waiting to save for a vacation that would provide enjoyment later. This preference for instant gratification can overshadow the value of the vacation, which may offer lasting memories and experiences. Ultimately, understanding present bias helps explain why some people might prioritize short-term pleasure over long-term satisfaction.