Question

Is there a natural bias to neglect the long run and concentrate too much on the short run in decision-making? Why is this so, or is it not so?

Answer 1

Yes it is so. There are many reasons. One thing is time horizon of individuals is limited. They can't imagine how things will have to change in long run. There is uncertainty. Second is people often are impatient. People can't wait for long. As Keynes said in the longrun we are all dead. Now this statement leds to another reason. People take usually those steps which benefit them during there lifetime as utility of that is much more than consumption o by future generations or benefits received by future generation.