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The expectations hypothesis of the term structure of interest rates (whose graphical representation is known as the yield curve) is the proposition that the long-term rate is determined purely by current and future expected short-term rates, in such a way that the expected final value of wealth from investing in a sequence of short-term bonds equals the final value of wealth from investing in ...
The expectancy theory of motivation explains the behavioral process of why individuals choose one behavioral option over the other. This theory explains that individuals can be motivated towards goals if they believe that there is a positive correlation between efforts and performance, the outcome of a favorable performance will result in a desirable reward, a reward from a performance will ...
Expectations are theoretically important for models such as the Efficient-market hypothesis which suggest that all information should be incorporated into the market, as well as for Modern portfolio theory which suggests that investors must be compensated for higher levels of risk through higher (expected) returns.
Expectation confirmation theory (or ECT) is a cognitive theory which seeks to explain post-purchase or post-adoption satisfaction as a function of expectations, perceived performance, and disconfirmation of beliefs. The structure of the theory was developed in a series of two papers written by Richard L. Oliver in 1977 and 1980. [1]
The first use adaptive expectations hypothesis was to describe agent behavior in The Purchasing Power of Money by Irving Fisher (1911), then later used to describe models such as hyperinflation by Philip Cagan (1956). [3] Adaptive expectations were instrumental in the consumption function (1957) and Phillips curve outlined by Milton Friedman ...
The policy-ineffectiveness proposition (PIP) is a new classical theory proposed in 1975 by Thomas J. Sargent and Neil Wallace based upon the theory of rational expectations, which posits that monetary policy cannot systematically manage the levels of output and employment in the economy.
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Rational expectations is an economic theory that seeks to infer the macroeconomic consequences of individuals' decisions based on all available knowledge. It assumes that individuals' actions are based on the best available economic theory and information.