Various Theories Concerning Foreign Direct Investment Economics Essay

This assignment tries to discuss various theories concerning foreign direct investment and give the statement as to whether the theories provide a successful explanation of the main determinants of such activity

In real sense the main theories of FDI does not provide successful explanation of the main determinants for such activity, as explained by Dunning and Lundan (2008:81) Multinational Enterprises and Global Economy 2nd Edition.

Definition of foreign direct investment

According to Graham and Spaulding (website information) direct foreign investment in its classical definition is defined as the company from one country making physical investment into building a factory to another country. Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provides a firm with new markets and marketing channels, cheaper production facilities, access to knew technology, products, skills and financing. For a host country or the foreign firm which receives the investment, it can provide a strong impetus to economic development. The direct investment in building, machinery and equipment is in contrast with making a portfolio investment, which is considered an indirect investment. In recent years, given rapid growth and change in global investment patterns, the definition has been broadened to include the acquisition of lasting management interest in a company or enterprise outside the investing firm’s home country. As such, it may take many forms, such as a direct acquisition of a foreign firm, construction of a facility, or investment in a joint venture or strategy alliance with a local firm with attendant input of technology, growing, licensing of

Ewe-Ghee Lim (web information) The paper tells about two aspects of direct foreign investment (FDI): its correlation with economic growth and its determinants. The first part focuses on positive spillovers from FDI while the second deals with the determinants of FDI. The paper finds that while substantial support exists for positive spillovers from FDI, there is no consensus on causality. On determinants, the paper finds that market size, infrastructure quality, political/economic stability, and free trade zones are important for FDI, while results are mixed regarding the importance of fiscal incentives, the business/investment climate, labour costs, and openness.

Dunning (1993:3), explain that there is less disagreement about

FDI THEORIES globalisation as a process of towards the widening of the extent and form of cross-border transactions; and the deepening of the economic interdependence between the actions of globalising entities located in other countries.

The FDI theories explain the reason why FDI occurs and the determinants of FDI. The theories have traditionally emphasises market imperfection

(Hymer, 1960; Kindlebeger, 1969) and firm specific advantages or ownership advantages derived from the ownership of intangible assets such as technologies, management skills, and organisational capabilities (Caves, 1971). Hymer’s market imperfections theories suggested that a firm may have certain advantage that may be generated from the fields of technology, management or marketing

A. L Calvet (1981:43-59) Journal of International Business Study (hhtp://teaching.ust.hk/ Accessed on 07.11.2009. He assert that Kindleberger provided the first comprehensive survey of the various theories of foreign direct investment along with the lines expressed by Hymer. He approached the question of direct investment from the standpoint of the perfectly competitive model of neoclassical economics by asserting that in a world of pure competition direct investment could not exist. Kindleberger (1969, p13) Indeed, when all markets operate efficiently, when there are no external economies of production or marketing, when information is costless and there are no barriers to trade or competition, International trade is the only possible form of international involvement. Logically, it follows that is the departures from the model of perfect competition that must provide the rationale for foreign direct investment. The first deviation had been noted by Hymer (1960/1976), who postulated that local firms have better information about the economic environment in their country than do foreign companies. According to his argument, two conditions have to be fulfilled to explain the existence of direct investment: (1) foreign firms must possess a countervailing advantage over the local firms to make such investment viable, and (2) the market for the sale of this advantage must be imperfect. It was, thus, a natural step for Kindleberger later to suggest that market imperfections were the reason for the existence of foreign direct investment. Specifically, he came up with the following taxonomy: Imperfections in goods markets, imperfections in factors market, scale economies and government imposed disruptions. This classification may be called the market paradigm; To encompass new developments in the field of determinants of foreign investment, a somewhat different taxonomy from that of Kindleberger was proposed to distinguish among four classes: (1) market disequilibrium hypotheses, (2) government-impose distortions, (3) market structure imperfections, and (4) market failure imperfections. The common feature found in all the hypotheses in group (1) will be the transitory nature of foreign direct investment. FDI is an equilibrating force among segmented markets which eventually comes to an end when equilibrium is re-established; that is when rates of return are equalized among countries. The unifying characteristic in group (2) will be the role played by either host or home governments in providing the incentive to invest abroad. Group (3) will include theories in which the behaviour of firms deviates from that assumed under perfect competition, through their ability to influence market prices. Finally, in group (4) will be classified theories which depart from the technical assumptions behind the model of perfect markets; that is, the assumptions about production techniques and commodity properties. This last category will deal basically with those phenomena which lead to market failure or, cases where “the decentralizing efficiency of that regime of signals, rules and build in sanctions which defines a price market system” will fail. (Bator 1958, p. 352)

Market disequilibrium hypotheses: The notion of a perfect economy and perfect competition requires the assumption that prices everywhere are adjusted to bring supply and demand into equilibrium. It may well be that because of segmentation in world markets rates of return are not equalized internationally. In a disequilibrium context flows of FDI would take place until markets return to stability. Instances of disequilibrium conditions that provide incentives to invest abroad are those which apply to factor markets and foreign exchange markets.

Ragazzi (1973:491) State that Currency overvaluation is perhaps the most salient example of these disequilibrium hypotheses. A currency may be defined as overvalued when at the prevailing rate of exchange production costs for tradable goods in the country are, on the average, higher than in other countries. Such an occurrence creates opportunities for profit-making by holding assets in undervalued currencies with the expectation that, once the equilibrium in the foreign exchange market is re-established, capital gains will be realized. In meantime, there is an incentive to locate production of internationally traded commodities in countries with undervalued currencies and to purchase income producing assets with overvalued money. The important point is that, once exchange rates return to equilibrium, the flow of FDI should stop. Even more foreign investors should sell their foreign assets, pocket the capital gains, and return to domestic operations.

Foreign direct investment may be attracted toward areas where the average rates of profit are higher. This is basically the capital markets disequilibrium hypotheses. It implies that, for a given level of risk, rates of return on assets are not equalized internationally by portfolio capital flows, due to inefficiencies in securities markets-such as, thinness or luck of disclosure.

“According to Piggott and Cook (1999:260-261) International Business Economics: A European Perspective 2nd Edition

It is difficult to fit into one neat theory because of the problem of definition; secondly any theory of FDI is almost inevitably a theory of MNCs. as well, and thus inseparable from the theory of the firm. Thirdly, the nature of FDI makes it a multidimensional subject within the sphere of economics as well as an interdisciplinary one. It involves the theory of the firm, distribution theory, capital theory, trade theory and international finance as well as the discipline of sociology and politics. It is therefore not possible to identify any single theory of FDI due to many explanations of FDI. Also not easy to classify these explanations into distinct and neat groups, due to substantial overlapping between some of the explanations.

They grouped the theories into three categories.

1).Traditional theories

2).Modern theories and

3).Radical theories

Traditional theories are based on neo-classical economic and explain FDI in terms of location-specific advantages.

Morden theories emphasise the fact that product and factor markets are imperfect both domestically and internationally and that considerable transactional costs are involved in market solutions. Also they acknowledge that managerial and organisational functions play an important role in undertaking FDI.

The radical theories, these take a more critical view of Multinational National Corporation (MNCs).

Let 1st examine the ownership, Location and Internalisation advantages, sometimes referred as paradigm of OLI.

To explain the activity of MNCs there is three different types of advantages which is important.

These refer to certain types of knowledge and privileges which a firm possesses and are not available to its competitor.

These arise due to the imperfections in commodity and factor market.

Imperfections in commodity markets include product differentiation, collusion, and special marketing skills, and in factor markets appear in the form of special managerial skills, differences in access to capital market, and technology protected by patents. Imperfect market may also arise from the existence of internal or external economies of scale or from government policies regarding taxes, interest rates and exchange rates.

The market imperfection gives rise to certain ownership-specific advantages, grouped under the following headings:

Technical advantages-include holding production secrets such as patents, or unavailable technology or management-organisational techniques.

Industrial organisation-relates to the advantages arising from operating in an oligopolistic market such as those associated with joint R&D and economies of scale.

Financial and monetary advantages-includes preferential access to capital markets so as to obtain cheaper capital.

Access to raw materials-if a firm gains privileged access to raw materials or minerals then this becomes an ownership-specific advantage

2).Location-specific advantages (LSA)-This refer to certain advantages which the firm has because it locates its production activities in a particular area:

a) .Access to raw materials or minerals this normally represents an LSA. This advantage, however, applies to all the firms established in the locality and is not sufficient to explain FDI in itself pg 261

b). Imperfections in international labour markets-these create real wage-cost differentials which provide an incentive for the MNC to shift production to locations where labour costs are low. Example electronics component firms using South East Asian locations for assembly production.

c). Trade barriers-These provide an incentive for MNCs to set up production in Europe to avoid CET. Similarly, high Canadian tariff barriers have been used in the past to attract US direct investment.

c). Government policies-such as taxation and interest rate policies can influence the location of FDI.

Internalisation-specific advantages (ISA) occur when international market imperfections make market solution too costly. This means the market is too costly or inefficient to undertake certain types of transactions, so whenever transactions can be organised and carried out more cheaply within the firm than thorough the market they will be internalised and undertaken by the firm itself.

The benefits of internalisation are as follows:-

a). the advantages of vertical integration cover such things as exploitation of market power through price discrimination and avoidance of government intervention by devices such as transfer pricing.

b). the importance of intermediate products for research-intensive activity: the firm appropriates the returns on its investment in the production of new technology by internalising technology.

c). the internalisation is not entirely costless. It creates communication, co-ordination and control problems. There is also the cost of acquiring local knowledge.”

1). Traditional theory

Capital arbitrage theory

The theory states that. Direct investment flows from countries where profitability is low to countries where profitability is high. It means therefore that capital is mobile both nationally and internationally. But sometimes implication is that countries with abundant capital should export and countries with less capital should import. If there was a link between the long-term interest rate and return on capital, portfolio investment and FDI should be moving in the same direction.

International trade theory-the country will specialise in production of, and export those commodities which make intensive use of the country’s relatively abundant factor.

2). Modern theory

Product-cycle theory –

New products appear first in the most advanced economy in respond to demand conditions.

The maturing product stage is described by standardisation of the product, increased economies of scale, high demand and low price

The standardised product stage is reached when the commodity is sold entirely on price basis.

The internalisation theories of FDI

The theory explain that why the cross-border transactions of intermediate products are organised by hierarchies rather than determined by market forces.

The theory of appropriability. The theory explains why there is a strong presence of high-technology industries among MNCs

3).The electric theory of FDI

The theory tries to offer a general framework for determining the extent and pattern of both foreign-owned production undertaken by a country’s own enterprises, and that of domestic production owned or controlled by foreign firm. Dunning and Lundan(2008)

Robock and Simmonds (1989:48) International Business and Multinational Enterprises 4th Ed

Assert that, the electric theory of international production enlarges the theoretical framework by including both home-country and host-country characteristics as international explanatory factors. It argues that the extent, form, and patterns of international production are determined by the configuration of three sets of advantages as perceived by the enterprises. First Ownership (O) advantage 2nd Location (L) and 3rd Internalization (I) advantage in order for the firm to transfer its ownership advantages across national boundary

Daniels, Radebaugh and Sullivan (2009:287) 12th Edition. International Business: Environment and Operations: Pearson International Edition

This is the theory which shows four conditions which is important for competitive superiority: demand conditions; factor conditions; related and supporting conditions and the firm strategy, structure and rivalry.

Demand conditions whereby the company start up production at near the observed market for example an Italian ceramic tile industry after World War II: At that time there were post-war housing boom and consumers wanted cool floors because the climate was hot.

Another factor is factor conditions which recall natural advantage within absolute advantage theory and the factor-proportions theory

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Critical Evaluation Of Consumer Theories Marketing Essay

Inside the idea of optimistic economics, the chief purpose of fiscal premise is to describe how the financial system works. According to Avnet, (2006): “… Viewed as a body of substantive hypotheses, premise is to be judged by its predictive power for the class of phenomena which it is intended to “explain.” … The hypothesis is rejected if its predictions are contradicted (“frequently” or further often than predictions as of an substitute hypothesis)

…”. A premise has to therefore be discarded if its prognostic power is feeble. (Avnet, 2006)

In “traditional” economic models of buyer choice agents are typically assumed to be super rational, do not behave inconsistent, as well as have a superior computation capacity plus so on. Psychologists question several of these assumptions moreover offer proof that the premise, in a number of circumstances, might generate weak predictions of buyer choice.

Economists typically assume buyers behave time-consistent. Psychologists question this hypothesis. In particular, there exists proof that buyers in a number of circumstances behave “myopic” or have present-biased preferences. Present-biased preferences might imply that buyers plan to do something, however change their mind as times goes by. For instance, myopic buyers might plan to start a diet tomorrow, however when tomorrow comes they prefer to postpone it yet another day. In the end they might not start the diet at all. (Ball, 2001)

Choice is the outcome of a process which involves assessment in addition to judgement; that is, the evaluation of dissimilar options moreover making a choice regarding which option to choose. In order for these processes to take place in addition to a choice to be made, there need to be two or further substitutes as of which to choose. In addition, these substitutes have to have a number of positive value; in this sense a 'choice' flanked by something which is definitely desired as well as something which is definitely not desired is not a true choice. The processes entailed in choice all involve cognition, moreover psychological theories concentrate on explaining how people make choices, in particular the cognitive processes that underlie choice. Empirical research on how people make choices moreover choices covers a range of dissimilar people in dissimilar circumstances, for instance as of clinicians treating patients or investors plus financial experts, to students taking part in psychological experiments. However, it proposes that dissimilar people in dissimilar circumstances frequently think regarding choices in the similar manner, reflecting the fact that human beings have a common set of cognitive skills. These cognitive skills along with their limitations are in addition influential in constraining choices so that choice making in reality varies as of what might be seen as ideal and logical. (Baltes, 1990)

Theories regarding judgement, choice making as well as choice generally fall into two categories: normative theories of cognition moreover descriptive theories of cognition. Normative theories are concerned by means of 'how we have to or ought to reason, make judgements and take choice'. Theories falling into this category comprise formal logic, probability premise, and choice premise. Descriptive theories set out to describe how people actually think when making choices plus have empirical proof to maintain them. It is this latter set of theories that we are concerned by means of in this paper, in order to inform our aim of exploring the processes through which people make choices. (Ball, 2001)

The Information Processing Approach to choice research can be traced back to Baltes, (1990) along with the notion of bounded rationality, that is, humans are 'bounded' by constraints in the environment for instance, information costs, and in the mind for instance, limited memory; these constraints shape people's behaviour. Research taking this approach initially focused on cognitive aspects of choice-making; further recently it has expanded to comprise emotional as well as ‘ease of justification’ aspects of choice-making. (Baltes, 1990)

The approach is based on the following assumptions:

We are highly selective regarding what information we attend to in addition to how it is worn.

Acquiring moreover processing information has cognitive and/or emotional costs.

We employ simplification mechanisms (heuristics) to select plus process information: lots of dissimilar heuristics have been identified.

Heuristics are chosen on the basis of the nature of the task problem.

Beliefs along with preferences are often constructed and or generated through the process of choice-making, as opposed to persons having known, well-defined preferences which they bring to a choice-making situation. (Baltes, 1999)

The Adaptive Choice-Maker Framework is an instance of the Information Processing Approach to choice-making. It is concerned by means of how persons choose flanked by dissimilar courses of action, in particular, in choice circumstances where no single substitute (or option) is best on all attributes (or qualities, features). These sorts of choices are known as preferential choice problems. (Baltes, 1990)

The Adaptive Choice-Maker Framework disputes that preferential choice problems are generally solved through a process of information acquisition as well as evaluation regarding the substitutes moreover their attributes. The attributes by which the dissimilar options are defined will vary according to:

Their desirability to the choice-maker;

The uncertainty of actually receiving the attribute value;

The willingness of the choice-maker to accept a loss on one attribute for gain on another attribute.

The following instance illustrates the role of attributes in the choice-process put forward by the Adaptive Choice-Maker Framework. Theorists dispute that there are ranges of strategies one might employ for solving a multi-attribute choice problem. The approach chosen will depend on the demands of the task for instance, the number of substitutes to be considered, how accurate the choice has to be, in addition to person dissimilarities. In other words, dissimilar persons will chose dissimilar strategies; moreover this will in addition vary according to the significance of the choice-making situation to that person. (Baltes, 1990)

A number of strategies will employ all relevant information; others will employ information in a further limited plus frequently extremely selective fashion. A number of strategies focus on the substitutes moreover process each one in turn, other strategies are further attribute-focused that is, the values of several substitutes on a single attribute are examined before information on another attribute is considered. (Baltes, 1999)

Simpler choice processes save on cognitive effort by only processing a number of of the choice-relevant information. In experimental conditions they have been shown to work less as well as less well the greater the number of significant attributes. Researchers have identified and named dissimilar types of heuristics.

Lexographic approach (LEX): here the approach is to identify and chose the substitute by means of the best value on the most significant attribute.

Satisfying Approach for Choices (SAT): this heuristic involves each attribute’s value for the substitute/option currently under consideration being compared to a pre-determined cut-off level for that attribute. If any attribute fails to meet the cut-off level, the option is rejected moreover the next option considered. Once a satisfactory substitute has been identified, that substitute is chosen (so it might not be the ‘best’). If no option passes the cut-off, the levels can be relaxed in addition to the process repeated.

Elimination by Aspects (EBA): this is a commonly worn heuristic containing elements of LEX along with SAT. EBA eliminates options that do not meet a minimum cut-off value for the most significant attribute or do not have a desired aspect for the most significant attribute. The removal process is repeated for the subsequent most significant attribute plus continues until a single option remains. The order in which attributes are considered reflects the choice-maker’s basic values. Theorist dispute that ‘choice accuracy’ is affected by the attributes worn for instance, selectively attending to irrelevant, or relatively irrelevant, attributes. (Baltes, 1990)

Researchers have in addition shown that choice-makers might combine choice strategies. A typical combined approach might involve elimination of a number of substitutes in an initial ‘broad brush’ viewing of the options, followed by a second phase in which the remaining options are analysed in further specify.

Laboratory-based research on the effectiveness/accuracy of heuristics has shown that heuristics can result in highly accurate/high quality choices by means of substantial savings in cognitive effort. However, no single heuristic does well across all environments as well as people therefore need a repertoire of heuristics. Researchers have in addition shown that, in cases of substantial time pressure, the simple LEX rule is frequently best in terms of maintaining choice accuracy. That is, it is best to examine some, although restricted, information regarding each option under severe time pressure than to examine a number of options in depth and not examine others at all. (Baltes, 1999)

There has been a lot of research looking at how to employ or choose dissimilar choice strategies. Key (relevant) findings as of this work are as follows:

People process information quite dissimilarly if faced by means of many substitutes four or further than if faced by means of just two or three substitutes.

People have a repertoire of choice strategies and sometimes plan in advance how to solve a problem based on the proof of what the task involves. However, sometimes approach selection is bottom-up, by means of little or no constructive awareness of a approach being selected.

Furthermore, people adjust their processing throughout the course of solving a problem in an “opportunistic” fashion as they learn further regarding the structure of the choice.

Choice strategies by means of high cognitive effort are further likely to be worn when choice accuracy is prioritised over saving cognitive effort.

In laboratory-based simulations, people who shift strategies in response to the demands of the choice or time constraints perform better.

Time pressure that is, a choice have to be made by a certain point in time has been shown to be one of the most significant choice task variables. Errors in judgement can be made as of either deciding too soon rush-to-judgement or as of delaying choices too long.

Person dissimilarities in values will define what constitutes an accurate or high quality choice that is, whether or not an person is happy or satisfied by means of the choice made. It is in addition likely that we adjust our ‘quality standards’ as a function of task demands such as time pressure, complexity of the choice. (Baltes, 1990)

The majority of research as well as theorising on choice-making has extremely much been approached in terms of understanding choice-quality or accuracy plus minimising cognitive effort. Further recently, the Adaptive Choice-Maker Framework has been extended to comprise emotion in addition to other goals for a choice for the reason that it is clear that approach selection moreover other aspects of choice behaviour are not just determined by cognitive effort along with choice accuracy. The other goals or desired outcomes of a choice are frequently developed constructively ‘on the spot’ moreover can affect the processes of the choice and the products of the choice. (Baltes, 1990)

Baltes, (1999) developed a choice goals framework for choice-making. In addition to maximising choice quality as well as minimizing cognitive effort, they disputed there were two further meta-goals for choice namely:

Minimizing the experience of negative emotion while making the choice in addition to afterwards;

Maximising the ease of justification of a choice to oneself plus to others. (Baltes, 1999)

The relative significance of these meta-goals, and other goals, will vary according to the specific choice-making situation. It would appear that factors such as the significance moreover irreversibility of the choice affect the manner these meta-goals are prioritised. Minimising negative emotion along with ease of justification are clearly potentially salient concerns for the Panel Study. In terms of the latter, Grady, (1994) disputes that needing to justify a choice might lead to the employ of choice strategies which are based on easily seen and communicable relationships among options. Work on the influence of minimising negative emotion inside the choice-making process is further developed as well as draws on other pre-existing theories in addition to research on how negative emotion influences on cognitive processing moreover how humans cope by means of negative emotion. These are described below. (Grady, 1994)

Not all choices evoke emotional responses, however sometimes people face emotion-laden choices.

There are contrasting views on the potential influence of negative emotion on the choice-making process:

Ball, (2001) disputes that emotion interferes by means of choice processes and degrades cognitive presentation apparent in augmented time to make a choice plus further negative error. This argument would propose that choice circumstances where negative emotions are aroused are, in a sense, analogous to highly complex choice circumstances. One would therefore expect persons to adapt to them in the similar manner as they adapt to complex choice circumstances that is by shifting to simpler, easier to implement choice strategies. (Ball, 2001)

An substitute view draws on coping premise, which disputes that people directly adapt to the negative emotion in one of two manners:

Problem-focused coping: Adopting this approach will mean the person try to solve the problem as well as possible, by means of the negative emotion being seen to indicate the significance of the choice to the person. (Grady, 1994)

Emotion-centred coping: This manner of managing negative emotion will mean action is taken directly to minimise emotion by changing the amount or content of thought regarding the choice. This might be achieved in a

Diversity of manners: refusing to make any choice; letting another person make the choice for you; showing an augmented preference for the status quo option or any other related option that is easier to justify to oneself; not avoiding the choice altogether however instead avoiding whatever aspects of the choice one finds most distressing. (Grady, 1994)

One type of choice which has the potential to arouse negative emotions is when trade-offs had to be made flanked by two highly valued things. An instance of an emotionally hard trade-off is life sustaining, however invasive moreover possibly painful, treatment versus quality of life. Grady, (1994) talked regarding sacred versus profane tradeoffs as well as noted that a number of tradeoffs are taboo – people just do not go there. For the reason that making trade-offs can generate negative emotions, persons might cope by means of emotion-laden choices by avoiding strategies which employ trade-offs of one attribute against another and instead employ non-compensatory strategies. (Grady, 1994)

The negative emotions experienced while making a choice involving hard trade-offs have been shown to influence on approach selection along with choice-making. For instance, research has found that emotion-laden choices are characterised by augmented amounts of processing in addition to avoidance of trade-offs. In addition, proof proposes that choice-makers tend to confront flanked by-attribute trade-offs explicitly when attributes are relatively low in emotional trade-off problem, however they avoid these explicit trade-offs when attributes are higher in emotional trade-off problem. (Carstensen, 2003)

This is a model which would appear to be highly relevant to the project as it is concerned by means of choices flanked by courses of action where none of the options is optimal in terms of all its attributes. Furthermore, proponents of this approach propose it is particularly relevant by means of respect to unusual circumstances, where the person cannot ‘go’ on past experience, moreover by means of regard to choices re prospect events. In the end, there appears to be relatively robust proof to maintain the framework. (Grady, 1994)

The approach is primarily concerned by means of cognitive processes and raises questions regarding the influence of learning difficulties/cognitive impairment/memory impairment as well as ability/quality/accuracy of choice-making. This will be an concern for the Panel Study in circumstances where there is a decline or loss of cognitive abilities: how do persons involved in those circumstances try to maintain continued involvement in choice-making for instance, by changing the amount plus manner information is offered; how are judgements made regarding someone’s ability to take choices; whether certain choices are judged too complicated etc. (Fung, 1999)

The recent shift to considering concerns of negative emotion and ‘ease of justification’ on the process along with outcomes of choice-making proposes the significance of exploring those concerns by means of Panel Study participants. For instance, do people avoid certain pieces of information in making a choice for the reason that they are too emotionally hard? To what extent does the notion of ‘ease of justification’ influence on the choice process, bearing in mind that many of the choices we will be exploring are relatively ‘public’ if not in the choice process itself, then in terms of the outcome of a choice? It is significant that we explore these other meta-goals in the interviews. (Chasseigne, 2000)

Another interesting research finding is that which proposes people’s preferences for/beliefs regarding things are frequently constructed not merely revealed in the course of choice-making. Perhaps this is particularly relevant where entirely novel circumstances are being encountered for instance, through sudden onset or degenerative conditions. It would in addition be good to explore the manner choice-making means that the beliefs/views which people hold in quite an

Objective sense might be challenged moreover changed throughout a choice-making episode.

The emphasis on information raises concerns regarding access to information, the manner information is offered in addition to how that might slant a choice. The phenomenon of ‘framing’ a key aspect of Prospect Premise that we discuss later in this paper links nicely to this. (Castel, 2005)

Finally, the choice-maker framework acknowledges numerous sources of person difference to account for dissimilarities in the manner persons make a choice and in the choice made for instance, cognitive ability; choice of heuristics; preferred styles of coping by means of negative emotion; communal context in which having to justify oneself. (Carstensen, 2003)

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Theories of Learning

Theories of Learning

Fill in the following boxes by defining Elemental and Holistic Models of Development.   Then you will describe 2 theories, including theorist (s) from each model of development.   Finally you will list the important points derived from each model learning theory.   Save this document and type directly onto the document and into the boxes.   The boxes will expand to accommodate what you write.   Submit as an attachment to the appropriate drop box.

  Model | Definition of each Model Learning Theory | Theory and Theorist 1 | Theory and Theorist 2 | Important Points Derived (Be sure to   number these theories and double space between them for easy reading). |
Elemental Model Learning Theory | “Represents the universe as a machine composed of discrete pieces operating in a spatio-temporal field: reactive and adaptive model of man.”(pg. 22) | Theorist: ThorndikeThe theory is that inexperienced learners are empty organisms who randomly and automatically respond to stimuli. When rewarded a specific stimuli is met with a specific response. (pg. 24) | Theorist: PavlovThe theory is that learning happens through the concept of conditioned reflexes. | Theorist Thorndike: Important point derived from this theory is that human organisms respond to stimuli, randomly or automatic, with or with our reward. Theorist Pavlov: Important point derived from this theory is that to response to conditioned reflexes will fade over time while the response to unconditioned reflex remains over time. |
Holistic Model learning Theories | “Represents the world as a unitary, interactive and developing organism: active and adaptive model of man.” (pg.22) | Theorist: Kurt LewinLewin’s field theory suggests that behavior is a result of both the person and the environment in which behaviors take place. | Theorist: Jean Piaget & Jerome Bruner The theory is human behavior starts with the organization of sensory-motor reactions. (pg.30) | Theorist Lewin: Important point...

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