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.

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balance sheet analysis balance transfer