adaptive expectations theory

Examples of adaptive expectations theory in the following topics:

• Relationship Between Expectations and Inflation

  • There are two theories of expectations (adaptive or rational) that predict how people will react to inflation.
  • The theory of adaptive expectations states that individuals will form future expectations based on past events.
  • Accordingly, because of the adaptive expectations theory, workers will expect the 2% inflation rate to continue, so they will incorporate this expected increase into future labor bargaining agreements.
  • This example highlights how the theory of adaptive expectations predicts that there are no long-run trade-offs between unemployment and inflation.
  • According to adaptive expectations theory, policies designed to lower unemployment will move the economy from point A through point B, a transition period when unemployment is temporarily lowered at the cost of higher inflation.

• Ouchi's Theory Z

  • Theory Z is a name applied to three distinct psychological theories.
  • Maslow in his paper Theory Z and the other is Dr.
  • Instead, he takes Japanese business techniques and adapts them to the American corporate environment.
  • Much like McGregor's theories, Ouchi's Theory Z makes certain assumptions about workers.
  • It is expected that once employees do rise to a position of high level management, they will know a great deal more about the company and how it operates, and will be able to use Theory Z management theories effectively on the newer employees.

• Sensory Absolute Thresholds

  • (Recently, signal detection theory has offered a more nuanced definition of absolute threshold: the lowest intensity at which a stimulus will be specified a certain percentage of the time, often 50%.)  
  • There are several factors that can influence the level of absolute threshold, including adaptation to the stimulus and individual motivations and expectations.
  • Sensory adaptation happens when our senses no longer perceive a stimulus because of our sensory receptor's continuous contact with it.
  • Additionally, an individual's motivations and expectations can also influence whether a stimulus will be detected at the absolute threshold.
  • If you are in a dark hallway searching for the tiny glow of a nightlight, your expectation of spotting it decreases the absolute threshold for which you will actually be able to see it.

• Productivity: Argyris

  • Argyris's theory of single- and double-loop learning has been applied to management theory to suggest the best ways for employees to learn.
  • He is best known for his work on learning theories in the area of learning organizations.
  • In single-loop learning, entities (such as individuals, groups, or organizations) modify their actions according to the difference between expected and obtained outcomes.
  • While this type of learning, and this broader type of behavior, is extremely common in the real world, it is not the ideal method to learn and adapt from a broader organizational level.
  • Argyris's theory of single- and double-loop learning has been applied to management theory in order to suggest the best way for employees to learn and think about new goals and strategies for an organization.

• Neo-Freudian Psychoanalytic Theory of Personality

  • Neo-Freudian approaches to the study of personality both expanded on and countered Freud's original theories.
  • Many criticized his theories for being overly focused on sexuality; over the years since his work, many other theorists have adapted and built on his ideas to form new theories of personality.
  • Alfred Adler was the first to explore and develop a comprehensive social theory of the psychodynamic person.
  • Carl Jung followed in Adler's footsteps by developing a theory of personality called analytical psychology.
  • Jung believed this persona served as a compromise between who we really are (our true self) and what society expects us to be; we hide those parts of ourselves that are not aligned with society’s expectations behind this mask.

• Goal-Setting Theory

  • People perform better when they are committed to achieving certain goals, enabling businesses to benefit from employing goal-setting theory.
  • To elicit some specific form of behavior from another person requires giving the person a clear view of what is expected.
  • Without proper feedback channels, employees find it impossible to adapt or adjust their behavior.
  • Apply goal-setting theory to the process and motivation considerations inherent in organizational behavior and business procedure

• Expectancy Theory

  • Expectancy theory is about the mental processes involved in making choices.
  • In organizational behavior, expectancy theory embraces Victor Vroom's definition of motivation.
  • Vroom introduces three variables within his expectancy theory: valence (V), expectancy (E), and instrumentality (I).
  • These three components of expectancy theory (expectancy, instrumentality, and valence) fit together in this fashion:
  • Analyze Vroom's expectancy theory to assess the accuracy and effectiveness of motivating based upon expectancy, instrumentality, and valence

• Evolutionary Psychology

  • Evolutionary psychology seeks to understand human behavior as the result of psychological adaptation and natural selection.
  • Evolutionary psychology stems from Charles Darwin's theories of evolution, adaptation, and natural selection.
  • The brain's adaptive mechanisms have been shaped over time by natural and sexual selection.
  • Consistent with the theory of natural selection, evolutionary psychology sees organisms as often in conflict with others of their species, including mates and relatives.
  • Charles Darwin's theory of natural selection has been highly influential in the field of evolutionary psychology.

• Other Considerations in Capital Budgeting

  • Traditional capital budgeting theory holds that investments should be made when the simple net present value (NPV) of an investment opportunity equals or exceeds zero.
  • However, such an investment approach fails to consider that management can adapt and revise its strategies in response to unexpected market and technological developments that cause cash flows to deviate from their original expectations.
  • In other words, it fails to capture managers' flexibility in adapting their decisions to evolving market and technological uncertainty.
  • A strategic implication of real options theory is that investment will be discouraged by exogenous uncertainty.

• Continuity Theory

  • The continuity theory proposes that older adults maintain the same activities, behaviors, personalities, and relationships of the past.
  • The theory considers the internal structures and external structures of continuity to describe how people adapt to their circumstances and set their goals.
  • Maddox and Robert Atchley are most closely associated with the continuity theory.
  • The theory is criticized primarily for its definition of normal aging.
  • The theory also fails to explain how social institutions impact individuals and the way they age.