10 Results for Tag: rational

Rational Expectations Theory

DefinitionIn economics, "rational expectations" are model-consistent expectations, in that agents inside the model are assumed to "know the model" and on average take the model's predictions

Rational Behavior

Rational Behavior What is 'Rational Behavior' A rational behavior decision-making process is based on making choices that result in the most optimal level of benefit or utility for the ind

Rational Choice Theory

DefinitionRational choice theory, also known as choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. The basic


Rationalization What is 'Rationalization' Rationalization is a reorganization of a company in order to increase its efficiency. This reorganization may lead to an expansion or reduction in

Rational Pricing

DefinitionRational pricing is the assumption in financial economics that asset prices will reflect the arbitrage-free price of the asset as any deviation from this price will be "arbitraged


DefinitionSatisficing is a decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met. The term satisfi


Fail What is 'Fail' In common trading terms, if a seller does not deliver securities or a buyer does not pay owed funds by the settlement date, then the transaction is said to fail. In a s

Greater Fool Theory

DefinitionThe greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants. A pri


Reaction What is 'Reaction' A reversal in the movement of a security's price. Reaction is most often associated with a downward movement in the price of a security after a period of upward

Game Theory

Game Theory What is 'Game Theory' Game theory is the study of human conflict and cooperation within a competitive situation. In some respects, game theory is the science of strategy, or at