Hyperbolic discounting leads to preferences reversals over time: the classic example is always preferring a certain $1 now to $2 tomorrow, but preferring a certain $2 in a week to $1 in 6 days. This is a pretty clear sign that it never “should” be done—An agent with these preferences might find themselves paying a cent to switch from $1 in 6 days to $2 in 7, then, 6 days later, paying another cent to switch it back and get th $1 immediately.
However, in practice, even rational agents might exhibit hyperbolic discounting like preferences (though no preference reversals): for example, right now I might not believe you’re very trustworthy and worry you might forget to give me money tomorrow. So I prefer $1 now to $2 tomorrow. But if you actually are going to give me $1 in 6 days, I might update to thinking you’re quite trustworthy and then be willing to wait another day to get $2 instead. (See this paper for a more thorough discussion of this possibility: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1689473/pdf/T9KA20YDP8PB1QP4_265_2015.pdf)
Hyperbolic discounting leads to preferences reversals over time: the classic example is always preferring a certain $1 now to $2 tomorrow, but preferring a certain $2 in a week to $1 in 6 days. This is a pretty clear sign that it never “should” be done—An agent with these preferences might find themselves paying a cent to switch from $1 in 6 days to $2 in 7, then, 6 days later, paying another cent to switch it back and get th $1 immediately.
However, in practice, even rational agents might exhibit hyperbolic discounting like preferences (though no preference reversals): for example, right now I might not believe you’re very trustworthy and worry you might forget to give me money tomorrow. So I prefer $1 now to $2 tomorrow. But if you actually are going to give me $1 in 6 days, I might update to thinking you’re quite trustworthy and then be willing to wait another day to get $2 instead. (See this paper for a more thorough discussion of this possibility: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1689473/pdf/T9KA20YDP8PB1QP4_265_2015.pdf)