Question

present bias is a tendency to prioritize immediate rewards over long - term financial goals. this can result in poor financial decisions, such as spending money on non - essential items rather than saving for future needs.
what is the main challenge of present bias in financial decisions?
○ it favors short - term over long - term goals.
○ it encourages long - term savings.
○ it helps in making investment decisions.
○ it makes people avoid impulse buying.

Explanation:

The definition of present bias is prioritizing immediate (short - term) rewards over long - term financial goals. Option 2 says it encourages long - term savings, which is opposite to the definition. Option 3 says it helps in investment decisions, but present bias leads to poor financial decisions, not helpful investment decisions. Option 4 says it makes people avoid impulse buying, but present bias causes spending on non - essential items (impulse - like spending). Only option 1 matches the description of present bias.

Answer:

A. It favors short - term over long - term goals.