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In economics, the law of increasing costs is a principle that states that to produce an increasing amount of a good a supplier must give up greater and greater amounts of another good. The best way to look at this is to review an example of an economy that only produces two things - cars and oranges. If all the resources of the economy are put ...
Law of effect. The law of effect, or Thorndike's law, is a psychology principle advanced by Edward Thorndike in 1898 on the matter of behavioral conditioning (not then formulated as such) which states that "responses that produce a satisfying effect in a particular situation become more likely to occur again in that situation, and responses ...
Escalation of commitment. Escalation of commitment is a human behavior pattern in which an individual or group facing increasingly negative outcomes from a decision, action, or investment nevertheless continue the behavior instead of altering course. The actor maintains behaviors that are irrational, but align with previous decisions and actions.
Effort justification. Effort justification is an idea and paradigm in social psychology stemming from Leon Festinger 's theory of cognitive dissonance. [ 1] Effort justification is a person's tendency to attribute the value of an outcome they put effort into achieving as greater than the objective value of the outcome.
Psychological pricing (also price ending or charm pricing) is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. In this pricing method, retail prices are often expressed as just-below numbers: numbers that are just a little less than a round number, e.g. $19.99 or £2.98. [ 1]
An example would be a factory increasing its saleable product, but also increasing its CO 2 production, for the same input increase. [2] The law of diminishing returns is a fundamental principle of both micro and macro economics and it plays a central role in production theory .
A loss of $0.05 is perceived with a much greater utility loss than the utility increase of a comparable gain. Loss aversion is a psychological and economic concept, [ 1] which refers to how outcomes are interpreted as gains and losses where losses are subject to more sensitivity in people's responses compared to equivalent gains acquired. [ 2]
The law of continuity implies the grouping together of objects that have the same trend of motion and are therefore on the same path. For example, if there is an array of dots and half the dots are moving upward while the other half are moving downward, we would perceive the upward moving dots and the downward moving dots as two distinct units ...