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How Does Competition Among Investors Lead to Efficient Markets

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How does competition among investors lead to efficient markets?


Definitions:

Equity Theory

A concept in social psychology that assesses the fairness of an individual's situation by comparing their input and outcome ratio to those of others.

Input-Outcome Ratio

A concept in equity theory referring to the balance between an individual's contributions to and the rewards they receive from their work or relationship.

Positive Reinforcement Technique

A behavior modification strategy that involves rewarding desirable behaviors to increase the likelihood of their recurrence.

Intrinsic Motivation

The drive to perform an activity for its own sake and personal rewards, rather than for some external reward or pressure.

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