balance theory

Definition

Balance theory states that the market will tend toward equilibrium. Fritz Heider proposed that people will attempt to maintain a psychological balance and form relationships that balance out their likes and dislikes. For example if Person A likes a celebrity and the celebrity likes a product but Person A originally disliked the product, then Person A is likely to end up increasing his enjoyment of the product or decreasing his liking of the celebrity or both. All these options create equilibrium.

Use balance theory in a sentence

You should try to understand how the balance theory works and see if there are any ways to utilize it.

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I did not like the balance theory, because I had my own theory that the market would remain unbalanced all the time.

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We had expected the market to be changing in the near future and considering balance theory suggested the direction we listened.

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balance sheet analysis balance transfer