Instructional Theories Learning Development

An instructional theory refers to a theory that provides clear guidance on how to assist individuals learn and develop. Instructional theories center on how to design material for enhancing the education of individuals. They differ from learning theories in the sense that while learning theories explain how learning occurs, instructional theories stipulate how to assist individuals to learn.

Stated differently, instructional theories, as informed by learning theories, delineate the core teaching approaches (such as worked examples versus partial solutions, lecture versus cooperative activities, immediate versus deferred reinforcements) that may be included in a lesson. Instructional theories are usually normative and situation specific. The field of instructional science deals with understanding and improving instructional methods to make them more appealing and effective (Edgar, 2012, p. 2).

The origins of instructional theories can be traced to formative endeavors by educational psychologists to map out the link between psychology and the pragmatic application of instructional theory in education settings. John Dewey (1910) and Edward Thorndike (1913) are two important theorists who envisaged a special connection between instructional theory and educational practice (Dijkstra, Schott, Tennyson & Seel, 2012, p. 3). The connection between the philosophical perspectives and instructional theories is obvious. For instance, learning activities in a traditional classroom are centered on and controlled by the instructor, who presents the materials to be learned and prescribes the kinds of learning activities that students engage in.

Learners are expected to read and analyze the information (through homework and classroom activity) until they master it. Knowledge is regarded as a commodity to be passed from the teacher to the learner. In sum, instructional theories identify methods of instruction (ways of supporting and facilitating learning), as well as the circumstances in which the methods may or may not be used.

A Perspective on the Connection between Theory and Practice

The connection between instructional theories and pedagogical practices is made complex by a number of factors. It can be perceived that pedagogical practices should be founded on the best instructional theories available, but this relationship may not be as simple. Educational practices are likely to be informed by philosophical beliefs than by empirical evidence and theoretical discernment of learning. Learning institutions are established according to the various cultural and community beliefs and worldviews, the human nature, as well as what are to be learned. They also differ with respect to their beliefs regarding teaching and learning, although philosophical convictions frequently come first (Duffy & Jonassen, 2013, p. 17).

All instructional programs and educational systems incorporate some instructional theory, even though such theory is in most instances implied and frequently goes unnoticed. Vastly different classrooms materialize from different philosophical views. For instance, if one is of the conviction that knowledge is produced anew by each student, that a student’s mental activity decides what he or she learns, and that learning happens from engaging in authentic assignments in a social atmosphere, then the resultant classroom is likely to involve learners working on projects and learning in groups.

In this manner, the students are able to discuss how best to tackle problems or consult on the meaning of various concepts. There is a consistency between theoretical beliefs and pedagogical practices. However, the question concerning which comes first is not always clear since evidence exists that people seek out and agree to information that affirms their preexisting beliefs while rejecting those that do not conform to such beliefs.

There exists a reciprocatory link between theory and practice. A common conviction is that knowledge flows from systematic theories to the advancement of effectual practices, that effective instructional theories inform sound pedagogical practices (Leong & Austin, 2006, p. 7). However, science does not always work in such a linear manner. An examination of both social and physical sciences reveals that ideas frequently derive from observation and interrogation of naturally occurring events. Scientific theories often come from attempts to find practical solutions to problems, such as asking the question “what is the best approach of teaching the concept of osmosis?”.

Established pedagogical practices that teachers have been found to be effectual should be used as sources of ideas in coming up with a practicable instructional theory. A final caveat in comprehending the connection between theory and practice involves acknowledging that the learners are more important than the instructor in deciding the material to be learned. However, this is not to say that the teacher’s role is unimportant, only that the perceptions, previous knowledge, and beliefs of learners should dictate what and if they learn things related to the teacher’s instructional goals.

Attribution Theory

This theory deals with the manner in which individuals perceive and use information to explain events (Higgins & LaPointe, 2012, p. 1). It looks at what information is collected and how it is treated to shape a causal judgment. Heider (1958) first proposed the attribution theory, although other psychologists such as Weiner (1974) and Jones et al (1972) developed a theoretical framework that later became a key research model in social psychology. Heider offered a discourse on what he termed as “commonsense” or “naïve” psychology. According to his perspective, individuals are similar to recreational scientists, attempting to understand the behavior of other individuals by gathering and analyzing information until they obtain a reasonable cause or explanation.

Instructional Theories – Key Statements and Assumptions

Attribution theory concerns itself with how people construe events and how this construal relates to their thoughts and behaviors. The theory presumes that individuals try to determine why people behave in the manner that they do. An individual seeking to understand why other people or person behaved in a certain manner may attribute one or several causes to the behavior (Erbas, Turan, Aslan & Dunlap, 2010, p. 118). Heider proposed that individuals usually make two kinds of attributions, namely internal attribution and external attribution.

Internal attribution involves the deduction that a person is acting in a certain manner because of some inherent attribute about the individual, such as personality or attitude. Conversely, external attribution involves the assumption that a person behaves in a certain manner due to the circumstances that he or she is undergoing. Attributions are also considerably affected by motivational and emotional drives (Higgins & LaPointe, 2012, p. 3). Faulting other people and evading personal blame are existent convenient and self-serving attributions.

Instructional-Theories-Learning-Development
Instructional-Theories-Learning-Development

Individuals also tend to make attributions in defending against what they perceive as attacks. People sometimes even blame victims for their circumstances as they seek to distance themselves from thoughts and feelings of suffering the same predicament. Lastly, individuals also tend to assign less variableness to other people than themselves, viewing themselves as more versatile and less conventional compared to others.

A three-stage process forms the basis of an attribution. First, the individual must observe or perceive a behavior. Second, the individual must trust that the behavior was deliberately performed, and lastly, the individual must establish if he or she believes that the other person was coerced into performing the behavior (in such a scenario, the cause will be attributed to the circumstances) or not (where the action will be attributed to the other individual). Weiner’s attribution theory focused on achievement. He identified effort, aptitude, task complexity, and luck as essential factors that affect attribution for achievement (Higgins & LaPointe, 2012, p. 2). Attributions are categorized under three underlying dimensions, which include stability, controllability, and the locus of control (Jarvis, 2012, p. 148).

The stability dimension looks at whether causes remain constant or change with time. For example, effort may be categorized as internal and variable while aptitude may be categorized as a constant, internal cause. Conversely, controllability contrasts causes that are within the control of an individual, such as skills, from those that one is not able to control, such as mood, ability, the actions of other individuals, and luck. Lastly, the locus of control dimension is divided into two poles, which include external and internal locus of control.

Application of the Attribution Theory

Weiner’s Attribution Theory has found widespread application in various fields, including clinical psychology, law, and education. Weiner contended that causal attribution determines how people react to achievement and failure. For instance, a student is not likely to experience a sense of pride and accomplishment if he or she receives an A grade from an instructor who gives only higher grades. Conversely, a higher grade from instructors who issues few high grades is likely to lead to immense satisfaction to the student (Weiner, 1980, p. 362).

Students with higher academic achievements and high self-esteem often attribute their superior performance and achievements to internal, established, and intractable factors such as aptitude while attributing failure to internal, tractable factors such as task complexity and the level of effort. For instance, students experiencing recurring failure in numeracy are likely to consider themselves as being less proficient in arithmetic.

This self-perception of numeracy ability evidences itself in the learner’s prospects of success on numeracy tasks, as well in their thoughts on failure or success in the same tasks. Similarly, learners with learning disabilities are more likely to attribute their failure to ability, which is an intractable factor and not effort, which is more tractable.

The Elaboration Theory

This theory holds that to optimize learning, instruction should be prepared in an order of increasing complexity. For instance, when teaching procedural tasks, it is important to present the simplest adaptation of the task first. The lessons that follow should present additional adaptations until all the tasks have been taught. In all the lessons, the teacher should remind the students of all tasks taught (synthesis or summary). An important view of the Elaboration Theory is the observation that the student needs to develop a purposeful context for the assimilation of consequent skills and ideas (Nenkov, Haws & Kim, 2014, p. 769). Therefore, the Theory deals solely with organizational approaches at the macro level.

It stipulates that the instruction begin with an overview that provides knowledge of a few simple but general ideas, with the rest of the instruction presenting exhaustive ideas that expound on earlier ones. The Elaboration Theory includes three models of instruction, as well as systems from stipulating these models based on instructional goals.

Similar to other models of instruction, the three components comprise strategy components. It is imperative to note that the Elaboration Theory is not fixed, but continues to improve as studies expose weak strategy aspects that should be purged from the model and novel strategy aspects that ought to be included into the models.

The Models of the Theory

The three models of the elaboration include procedurally organized model, the conceptually organized model, as well as the theoretically organized model (Reigeluth, 2013, p. 368). A procedurally organized learning program, such as a regression analysis course, would teach the least complex and most generally applicable processes and procedures first, with the rest being taught as is necessary in attaining the same purpose but under different and more challenging conditions.

Conversely, a course in genetics may utilize a conceptually organized model where the general concepts are presented first. Lastly, a course in introductory microeconomics would probably utilize a theoretical structure where the fundamental principles (such as marginal costs, costs and opportunity costs, scarcity, rational choices, etc.) are taught first.

Application of the Elaboration Theory

The theory may be applied to the design of instruction, particularly in the cognitive domain. Instruction is more effectual when it adheres to an elaboration strategy, that is, the use of epitomes comprising analogies, motivators, syntheses, as well as summaries. For instance, nearly all economic principles may be explained as elaborations of the classic law of demand and supply, including taxation, regulation, and monopolies.

Problems with the Instructional Theories and Recommendations

Elaboration theory contends that the structure of content should be made plain and overt to learners through a number of organizers and synthesizers. This view is rather problematic in the sense that presenting learners with an outline that reflects the text structure is likely to encourage memory-level indoctrination and encumber the transfer of the memorized material to problem-solving assignments. Such likely negative outcomes of explicit teaching structure might be because of the continuous knowledge-of-result feedback that is usually characteristic of motor learning tasks. It is uncontested that learning may not occur when learners are able to decipher things effortlessly.

As it is currently constituted, the Elaboration Theory is more of an instructional design procedure than a theory. It provides precise steps for structuring instruction. Such a procedural approach presents two principal problems. First, the procedural directions prescribed beforehand often go beyond the knowledge base regarding instructional and learning processes and are frequently at variance with such knowledge and second, those tasked with designing instructions are disposed to adhere to models in a general, principle-based manner notwithstanding the procedural stipulations.

The theory should be redeveloped into a series of guiding rules that are lucidly referenced to instructional and learning processes. A rule-based formulation will permit instructional designers to adapt the theoretical constructs to a wider variety of situations.

The Component Display Theory

This theory was developed by David Merrill (1983) and delineates the microelements of instruction, that is, particular ideas and means of teaching them (Reigeluth, 2013, p. 279). The theory categorizes learning as bi-directional and comprising of content (concepts, facts, processes, principles, and procedures) and performance (memory and generalities). It identifies four principal forms of presentation, which include rules, examples, recall, and practice.

Rules refer to expositive presentation of generality while examples are expositive presentation of occasions and instances (Duncan & Goddard, 2011, p. 80). Conversely, recall is inquisitory or probing generality while practice refers to probing instances. The Component Display Theory also includes secondary presentation forms, which include goals, mnemonics, preconditions, as well as feedback. The theory stipulates that instruction is only effective as long as it contains all essential primary and secondary forms. Therefore, a comprehensive lesson would comprise of a goal, followed by a permutation of rules, examples, practice, mnemonics, recall, and feedback that are task-specific and appropriate.

CDT further proposes that for a given goal and student, there exists a distinctive combination of the various forms of presentation that leads to the most effectual and successful learning experience. In addition, a number of assumptions underlie the Component Display Theory. While there are several varieties of memory, the theory holds that algorithmic and associative memory structures have direct connections to the performance aspects of Find/Use and remember correspondingly. While algorithmic memory is made up of outlines or rules, associative memory consists of successive levels of network structure. The differentiation between the Find and Use performances lies in the use of extant rules in processing inputs compared to forming new rules through the restructuring of existing ones.

Application of the CDT

 The Component Display Theory has found extensive usage in applied instructional design. It was employed in designing the TICCIT computer-based instructional system (Choi, 1986, p. 40). One of the key roles of instruction is to foster active mental processing by the learner. Evidence exists that there is a direct correlation between the quality and quantity of learning and cognitive processing of pertinent information by the student. Nonetheless, proper use of attention focusing information, as well as an experiential environment, may improve the requisite mental processing, thereby improving the level of learning. Because computers are interactive, the execution of this active involvement becomes easier than is the case with other instructional media.

Limitations of the CDT

There exist at least for different elements of instruction that impinge in student performance, including the organization of instruction, the method of instruction delivery, student motivation, and the method used in managing the interaction between the instruction and the student (Choi, 1986, p. 43). Further, instructional organization may be classified into two distinct categories, which include organizing instruction on a set of topics and organizing it on one topic. The Component Display Theory only examines the organization of instruction on one topic. Although the theory covers only a single, limited facet of instruction, its meticulous procedures offer instructional designers ways of producing effectual instruction within this limited domain.

Instructional Theories Conclusion and Thoughts

The basic aim of instructional theories is to enhance the quality of instruction. A learning-focused instructional theory should provide guidelines for designing learning environments that can offer the proper combinations of self-direction, empowerment, structure, guidance, and challenge. It must also include guidelines for aspects that have been mostly ignored in instructional design, which include deciding among the various instructional approaches, including project-based learning, tutorials, problem-based learning, and simulations.

The needs for learning have increased and, therefore, new paradigms must provide guidelines for promoting social, emotional, spiritual, attitudinal, and ethical development, as well as an intricate understanding, meta-cognitive strategies, complex cognitive tasks, and higher-order critical thinking skills in the cognitive sphere. Various instructional theories must provide guidelines in every of the above spheres of learning and development.

References

Choi, S. Y. (1986). Application of Component Display Theory in Designing and Developing CALI. Calico Journal, 3(4), 40-45.

Dijkstra, S., Schott, F., Tennyson, R. D., & Seel, N. M. (2012). Instructional Design: Volume I: Theory, Research, and Models:volume Ii: Solving Instructional Design Problems. Hoboken, NJ: Taylor and Francis.

Duffy, T. M., & Jonassen, D. H. (2013). Constructivism and the technology of instruction: A conversation. Hillsdale, NJ: Lawrence Erlbaum Associates Publishers.

Duncan, S. F., & Goddard, H. W. (2011). Family life education: Principles and practices for effective outreach. Thousand Oaks, CA: SAGE.

Edgar, D. W. (2012). Learning theories and historical events affecting instructional design in education: Recitation literacy toward extraction literacy practices. Sage Open, 2(4), 1-9.

Erbas, D., Turan, Y., Aslan, Y. G., & Dunlap, G. (2010). Attributions for Problem Behavior as Described by Turkish Teachers of Special Education. Remedial and Special Education, 31(2), 116-125.

Higgins, N. C., & LaPointe, M. R. P. (2012). An individual differences measure of attributions that affect achievement behavior: Factor structure and predictive validity of the academic attributional style questionnaire. Sage Open, 2(4), 1-15.

Jarvis, M. (2012). Teaching psychology 14-19: Issues & techniques. Abingdon, UK: Routledge.

Leong, F. T. L., & Austin, J. T. (2006). The psychology research handbook: A guide for graduate students and research assistants. Thousand Oaks, CA: Sage Publications.

Nenkov, G. Y., Haws, K. L., & Kim, M. J. (2014). Fluency in Future Focus: Optimizing Outcome Elaboration Strategies for Effective Self-Control. Social Psychological and Personality Science, 5(7), 769-776.

Reigeluth, C. M. (2013). Instructional-design theories and models: An Overview of Their Current Status. Hillsdale, NJ: Lawrence Erlbaum Associates.

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Recruitment Practices NHS Dissertation

Impact of Recruitment Practices on Employee Retention: A Case Study of Community Nurses in the NHS

This dissertation is based on evaluating the effect of recruitment practices on the retention rate of an organisation. The study focuses on the health sector on NHS and analyses the reason for the high turnover rates of the NHS nurses. Thus, the report is dedicated to the analysis of secondary qualitative and quantitative in finding the effect of the recruitment practices on retention rate in NHS nurses. The report shows the recruitment practices of NHS and the possible reasons for their high turnover.

The study has allowed evaluation of the recruitment and selection practices that have an impact on the retention of the community nurses in the NHS. The reasons of increasing employee turnover or lack of retention as found in the research are; poor recruitment planning, the wrong expectation of job roles and responsibilities, ineffective communication of job roles, and lack of use of technology to express the company’s culture, norms, and facilities. The high turnover rate is linked to the recruitment practices using the literature review of the past studies. The study found a difference in the actual practices and advertised practices of National Health Services.

This is one of the many reasons the NHS nurses are dissatisfied in their workplaces. In the NHS, internal recruitment effectiveness is a primary driver of motivation of nurses and consequently to their retention. The study suggests areas for improvement in the recruitment practices in terms of addressing diversity, regional shortcoming, technology usage, internal recruitment effectiveness, national and international recruitment, and demographic balance.

Dissertation Objectives

  • To explore the impact of recruitment on retention in the NHS
  • To evaluate the existing recruitment practices that drive the retention of NHS nurses
  • To make appropriate recommendations for effective recruitment practice that contribute to the retention of community nurses in the NHS
  • To achieve the research objectives, the following research questions are set:
  • Research Question 1: What are the recruitment practices for community nurses in the NHS?
  • Research Question 2: How the existing recruitment practice are relevant to employee retention on NHS focus?
  • Research Question 3: Which of the best recruitment practices should NHS adopt that retain in the NHS?
NHS-Recruitment-Practices-Dissertation
NHS-Recruitment-Practices-Dissertation

Dissertation Contents

1 – Introduction
Background of the study
Purpose of research
Research questions and objectives
Rationale of research

2 – Literature Review
Human resource management
Recruitment
Retention
Recruitment process
Sources of recruitment
Methods of recruitment
Recruitment challenges
Selection practices
Initial screening and application form
Assessment centres and psychological testing
Interview
Employee turnover
Employee Retention factors
Compensation, reward and recognition
Promotion and work-life balance
Training and development
Job motivation and satisfaction
Job characteristic model
Herzberg motivation theory
Job satisfaction and employee retention

3 – Research Methodology
Research design and approach
Descriptive research
Research approach: Inductive vs deductive
Research methods
Research strategy
Data collection and sources
Study population
Data analysis

4 – Data Analysis
Community nursing expectations framework
Quantitative data
Community nurses as a proportion of the total workforce
Demographics of community nurses
Workforce statistics and shortfalls of community nurses
Percentage change in community nurses
Joiner and leaver of community nurses
Turnover rate for community nurses
Workforce nationality and overseas employees
Qualitative data
HR planning context
Recruitment and selection practices
Retention practices and Rate at NHS
Retention issues and challenges for community Nurses NHS

5 – Result and Discussions
Summary of quantitative and qualitative findings
Evaluation and discussion of results

6 – Conclusion and Recommendations
Conclusion
Recommendations

References

Appendix

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Outsourcing Low Cost Countries

Benefits and Risks of Outsourcing to Low Cost Countries

Apparel and luxury value chains have come up with strategies so as to be cost competitive, increase the income, and expand the market for their goods. Outsourcing the end-to-end supply chain means that activities of an organization are carried out by an external company that specializes in these activities (Pickles et al., 2015). More so, a company can pay attention to its key competencies satisfy consumers, and be more flexible in maintenance and operation of its supply chain.

Apparel and luxury industry is very volatile today, frequent changes in expenses, risks, and demands for materials and goods as well as the changes in factors like international business environment are some of the challenges affecting the end-to-end supply chain. Anything that halts or reduces the movement of material, as well as the apparel and luxury goods, are considered a problem to the supply chain (K3SoftwareSolutions, 2017).

Outsourcing Benefits

Apparel and luxury companies have been able to expand their supply chain to many different countries and migrating to outsource manufacturing which has seen reduction in the cost of production. This strategy has promoted division of labor throughout the end-to-end supply chain by allowing company to concentrate on principal business undertakings. The organization is allowed to concentrate on its core competencies while specialist suppliers are given non-core undertakings (Handfield, 2017).

Suppliers who can carry out the processes more efficiently are tasked with this role and therefore outsourcing in low cost countries helps make the supply chain more effective. International brands have been allowed to create a completely responsive supply chains as well as bringing apparel and luxury products of low price to the shelves of stores (Handfield, 2017). Low priced goods are as a result of using external company’s expertise, knowledge and links to make cost-effective plans. Besides, time is economized since the time taken in designing, and delivering new clothes and luxury products to the market has been reduced from over a year to only a few weeks (Handfield, 2017).

Through outsourcing in low-cost countries, companies have been able to achieve effective processes, low-priced goods, and consumer satisfaction leading to outstanding performance and strategic advantage. Supply chain also becomes more flexible as the company has freedom to choose who they can do business with. Also, outsourcing enables the end-to-end supply chain of the organization to be more traceable (Robinson, and Hsieh, 2016).

Outsourcing-Low-Cost-Countries
Outsourcing-Low-Cost-Countries

Outsourcing Risks

Despite the benefits, an organization exposes their brands to great risks through outsourcing because it becomes a supply chain against supply chain. When going after cheap labor, apparel and luxury companies have been putting immense pressure on the suppliers who in turn are ready to reduce their invested capital to have low costs (Handfield, 2017). So as to compete with other businesses in the low-cost countries, suppliers forwent investments and labor practices that reduces the safety standards in a company and this is likely to damage the brand image of the apparel.

Poor working conditions in the apparel and luxury industry so as to maintain common local codes in low-cost countries is a disadvantage to the supply chain (Handfield, 2017). Another challenge to the supply chain is the abroad manufacturing delays. Apparel and luxury stores that are in western countries are progressively relying on the clothes and accessories from countries like China. Most newcomers to the industry may be found off guard by the delayed manufacturer (K3SoftwareSolutions, 2017). Moreover, damaged shipments and some that get lost is another menace to the apparel and luxury industry. Possible unseen costs such as inflated shipping price can result.

Besides, there are possible setbacks to the supply chain for instance late receiving of inventory leading to consumer dissatisfaction, loss of income and problems in the end-to-end supply chain. Problems may also arise during integration of the two Apparel and luxury companies affecting supply chain. If the hired company economize, use cheap materials or even fail to assess risk fully, the supply chain will be affected due to decreased sales and brand equity (Meeken, 2013).

Conclusion

Outsourcing in low-cost countries helps Apparel and luxury companies be more efficient in their operations because they concentrate of core competencies and they can produce cheaper clothes and accessories as well as satisfying consumers, therefore, affecting supply chain positively. However, there are risks involved such as pressuring suppliers to reduce investment capital to keep low costs. More so, companies adopt common local standards which can ruin the brand image and problems in the hired company can also affect the organization negatively.

References

Handfield, R. (2017, August 23). Needed: A New Way to Manage Risk in Low Cost Countries. Supply Chain Resource Cooperative.

K3 Software Solutions, (2017, December 8). Supply Chain Challenges in Apparel Industry and How You Can Fix Them. Fashion ERP.

Meeken, Z. (2013, June 13). The Risks and Benefits of Outsourcing Supply Chain Management. Business.org.

Pickles J, Plank L, Staritz C, Glasmeier A (2015) Trade policy and regionalisms in global clothing production networks. Camb J Reg, Econ Soc 8(3):381–402

Robinson, P. K., & Hsieh, L. (2016). Reshoring: a strategic renewal of luxury clothing supply chains. Operations Management Research, 9(3-4), 89-101.

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Behavioral Finance Financial Decision Making

Behavioral Finance and the Psychology of Financial Decision

Behavioral finance and financial decisions have a big role in shaping critical decisions that people make. The study summarizes the facts about financial choices and the behavioral and psychological theories influencing them. We learn that people have predisposed cognitive constraints coupled with low levels of financial literacy, in such regard, their decision-making choices violate sound financial principles. The case studies teach us that most investors and managers over-extrapolate from past returns and trade, or they make decisions based on overconfidence and personal history.

We explain most of these behaviors based on behavioral finance theories like prospect theory, behavioral finance, and behavioral corporate finance. Many companies and institutions today shy away from traditionally defined benefit pension plans in favor of defined contribution plans, in such circumstance, the role of the financial adviser is gaining an integral value.

In this case study, a recent graduate from UMUC is employed to advise different clients on investment. The consultant delves into studying the biases in financial behavior that predict prospective theory. While applying the key concepts of behavioral finance, the consultant can recognize that the client (Violet) displays behavioral biases that impede optimal savings and consumption allocation. He can learn this by deducing from concepts of finance that assess how people organize their financial assets by creating separate slots for money designated for specific roles as well as other approaches such as mental accounting.

Expected Utility and Prospect Theory:

Unlike most of the economic theories, Expected utility theory is the most preferred by scholars ((Shiller, Robert J.). The approach attracts people because it has the best economical representation characterizing true rational behavior in uncertain situations. However, application of expected theory is criticized in many circumstances because of the systematical misrepresentation of human behavior.

Allais (503) proved that Prospect Theory refers to a mathematically developed theory that substitutes “value function” contrasted to “utility function” and “weights” contrasted to “probabilities” in expected utility theory. Here, people work to increase the weighted total value instead of utility such that probabilities do not equal weight. Simply put, people view extremely probable as certain but the improbable events as impossible.

In many circumstances, prospect theory appears inconsistent with expected utility theory. To begin with, in probabilities, utility is all linear but not value. Also, value is defined regarding losses and profits, but utility depends on final wealth.

Contrary to expected utility theory, prospect theory foretells that preferences depend on how a problem is approached. In case the reference point defines the outcome as an advantage, in this case, the resulting value function will be curved in, and those making decision will be risk-averse.  But if the reference point’s outcome is seen as a loss, those making decisions will be risk seeking since is a convex value function.

Violations of Expected Utility

The possible abuses of this theory include the Allais paradox (certainty effect), and inflation of small probabilities. As for Allais paradox, there is an extreme underweighting of high probabilities. In such a case, it falls short of certainties such that the travel time outcomes become extremely attractive. On the other hand, inflation of small probabilities violation projects itself in the form of a set of stated-preference route-choice challenges.

Value Function

The definition of the value function lies on variations from a reference point, and in most circumstances, it is risk aversion–concave for gains, convex for losses. Similarly, value function is acute for losses than for profits. In this case, the stress of decisions is less compared with the equivalent probabilities, with few exceptions in the assortment of low probabilities. A value strategy deals with the purchase of stocks that have low prices compared with the dividends, earnings, book assets, or similar measures of significant value.

The Implications of Prospect Theory for the Efficient Market Hypothesis

An efficient market, based on the definition by (Fama 1965), is characterized by a large pool of rational profit maximizers who compete against each other to interpret the market prices of individual securities in the years to come; out of which a large pool of the present information is easily available to all participants. The prevailing competition in such a market opens the effects of new information on the actual prices in an instantaneous way. In such a way, the prospect theory sets in under the circumstance that makes stock price unpredictable following a random pathway.

Provided that information flow is unrestricted and quickly reflects in the stock price, the probability for the future price to change will depend not on today’s price changes, but on tomorrow’s news. Given that news is unpredictable, consequently, price changes also turnout unpredictable, and this conforms to the principle of prospect theory whereby people view extremely probable as certain but the improbable events as impossible.

Efficient Market Hypothesis is characterized by the security prices that reflect available information. It is based on the traditional view that investors use rationale in executing the present information to increase the expected utility.

Anomalies

The Anomalies of Efficient Market Hypothesis’ set in when people feel there is something wrong with the concept of Efficient Market Hypothesis. Under such conditions, the rational approaches of investors lacks consistence. It is not wholly right and must be analyzed alongside other human behavior approaches like the prospect theory, overconfidence, or expected utility, or over and under reaction, as well as the limits to arbitrage. Examples of anomalies as expressed by prospect theory include the size, valuation, and the momentum effect.

  1. The Valuation Effect. Studies reveal that firms with higher P/B multiples are outperformed by those with low price/book (P/B) multiples.
  2. The Size Effect. Studies predict that firms with smaller market capitalizations outperform those with large market capitalizations, disregard of the controls in their higher risk.
  3. The Momentum Effect. Studies reveal that firms with good performance for the past six months to one year period outperform those that performed poorly over the same period.

Bias identification and how such behavioral finance concepts affect their investment decisions

The First Colleague: The Concept of Illusion of Control

The stated bias happens when people overly justify their ideas. It describes people’s propensity to believe that they can exert influence on the outcomes of action when, in the real sense, they cannot. When this kind of bias occurs, people behave as if they can fully control their situations than they actually can ((Ising, Alexander).

The first colleague responds by claiming to know the technology industry and is determined to invest in them. While he might have worked in the industry for a while, it is not justifiable to assume that the circumstances will prevail in the long run. He is preoccupied with the illusion of control bias.

However, the illusion of control bias can be financially damaging since entrepreneurs might be motivated to trade more than what is right. It may lead them to employ limit orders, maintain under-diversified portfolios, or other related means just to express a false sense of influence over their trade portfolios.

People who practice this bias find it hard acceding with the irrationality and the changing nature of markets and the fact that their expectation is a failed one. The outcome is a spiral of investment catastrophe with the rationalization that while their belief is right, the one who drove the buttons was so incompetent.

In the long run, the investor becomes overconfident. The consequences of long-term investment may not be affected by the immediate-term opinion, emotions, and impulses that frequently engulf financial transactions. Rather, the success or lack of it emanates from uncontrollable factors such as the prevailing economic conditions and corporate performance.

The Second Colleague: Confirmation Bias

According to the second colleague, the value of commercial property in the city has maintained a 14% increase since the year 2000 reported a famous newspaper article. Now, this is almost two decades down the line. It is very unbelievable to assert that the value of the property has remained consistent over such a lengthy period, and very few investors would settle on that. However, depending on the interest of the reader and the prevailing circumstance, we can only assume that the type of newspaper is biased towards such reports and that the investor too is biased and love reading similar reports.

According to confirmation bias, individuals are drawn to information that substantiates their existing perceptions. It is just similar when a person prefers watching news from a TV channel that represents his/her political views while evading those that feature commentators of divergent opinions. Similarly, people behave in the like manner concerning their financial issues. Entrepreneurs believe in the market conditions will make them walk toward information sources that validate such a belief.

While it is acceptable to attach an emphasis to the consequences of our aspirations, for example, investing heavily in the stock of the firm you’re working for, it poses significant risks when it comes to diversification. If you should overcome confirmation bias, stress must be levied on obtaining information from various.

The Third Colleague: Depicting Recency Bias

Recency bias is a cognitive intrusion that encourages to perceive the most recent information as more relevant compared to the old knowledge. However, this may not be necessarily true. People base their investment decisions on how the market has been recently performing. The exact state is seen on the third respondent whose investment decisions in the Omega Corporation are drawn from the current state of the company and industry. She denotes that from the decline of the industry to capitalize on her investments since she presumes that case to remain constant for some time.

Most entrepreneurs have the inclination to follow investment performance by investing more in the industry when it is peaking and just about to reverse. Given that the investment has been picking up recently, investors anticipate that to remain the case. However, based on the behavioral theory, it would be wrong for her to rely on this approach to make financial decisions. In most circumstances, people do extrapolate from recent performance and employ them as a signal of future performance which is very wrong. Consequently, entrepreneurs fall into the ploy of over-purchasing the now outperforming asset and under-own the now drifting asset.

Behavioral Finance Dissertation
Behavioral Finance Dissertation

Behavioral Finance and Investments

Siosan’s utility function. Contrasted with that assumed in traditional finance theory

Traditional finance posits that humans are risk-averse, they love greater certainty than limited certainty and have a perfect utility function. Conversely, behavioral theorists assume that people display multiple characteristics and while they may be risk-averse, they may also be risk-seeking, risk-neutral, or any blend of the three. Depending on how things present themselves influences decision making.

The utility function measures an individual’s preferences over a set of products, measured in units referred to as utils. Utils exemplify the level of satisfaction of a consumer from choosing a specific type or number of products. Traditional finance is built on the utility theory with an assumption of diminishing marginal return. On the other hand, Behavioral theorists assume that human beings don’t always act in their best financial interests.

Appropriate in this case study, the utility function specifies the satisfaction of an investor out of all possible combinations. For example, an investment with low risk and high return has a bigger utility than that with high risk and low gain. This kind of function represents both their welfare along with their preferences. Violet expresses utility function that follows the behavioral approach. She wants to spend more. However, she’s quite unaware of the circumstances of tomorrow reflected in her limited investments. Under a traditional approach, Violet would either invest or not invest at all. It would be that she has knowledge of the future market or she does not, and if she lacks, her utility function would be concave. She would spend less just to avoid the risks in the future.

Similarly, she purchases expensive goods like cars and takes vacations for her satisfaction although, she feels reluctant to incur debts. This is opposed to traditional finance that assumes a diminishing marginal utility; Violet proposes utility function that will always satisfy her interests and won’t diminish. Violet expresses some mix of traditional and behavioral approach in some part, and traditional finance is reflected in the way she detests debts. Albeit, she does little to avert those debts, thus in part demonstrating a behavioral approach.

Siosian’s Behavioral Biases and how a rational economic individual in traditional finance would behave differently concerning each bias

Various cognitive predispositions cause several behavioral biases or under-saving inclinations. This is according to the perception by behavioral scientists who present several biases that emanate from such predispositions by grouping them into three categories. Such include preference biases, perceptions of prospects, perceptions on how to make decisions bearing in mind the rest of variables, and price perceptions. The typical behavioral bias presented in this case is the preference bias, and it manifests itself in the form of the self-control, loss aversion, and anticipatory utility.

Costly self-control bias- Living for today

Behaviorists propose that many people struggle with self-control in various fields. It may present itself through over-eating, under-saving, or over-snoozing, what we can call as “living for today”. Approaches to costly self-control also suggest that such people will value commitment such that they will choose, and even pay, to limit their future decision in some way, in an attempt to discourage their future over-consumption predilections.

However, in this case, study, Violet fits this model of costly self-control bias. We find that she engages in costly endeavors like buying expensive cars and paying for expensive meals in upscale vacation resorts. She does this at the expense of investing. In fact, she would do all the best she can to live a luxurious life while doing little on her mortgage and other investments. Her approach is behavioral and contrary to how traditional theorists would behave since they would fear the risks of tomorrow and would spend less on consumption and be concerned about the future.

Loss Aversion

The bias is comparative to some reference point like current consumption, or friends’ consumption. Loss aversion may also be seen as a potential threat to consumers leveraging their savings rates. People fear more to invest in their view of avoiding losses (Thaler, Richard, and Shlomo 164-187).

Loss aversion occurs when people easily notice the reduction in investment portfolio more than how they view gains, and this may be even when the profits are greater. They frequently get upset when they lose money during the market recession such that they remember those losses forever, but they would hardly remember the time they made 40-percent increase, just the time they lost 30-percent. We can state that Violet has an outspoken loss aversion bias when she says she detests making losses. Given that she has very little investment but high expenditure, this might be the reason why she rarely invests. Her approach reflects a traditional finance theory that assumes people are risk-averse.

Siosian’s Retirement Portfolio and Justification

Violet’s retirement portfolio is such that she maintains a minimal retirement plan where she deposits half the sum of money coming from her annual bonuses and none-salary incomes. On the other, we notice that she runs a very small mortgage and limited investments that can sustain her. Basing on such decisions, her retirement portfolio is so inefficient.

The Social Security Administration posits that on average, a 65-year pensioner can expect to stay for the next 18–20½ years after quitting the job (Benz par 3). Nonetheless, health advancements now make people stay for more years, and it would be advisable that you schedule a retirement portfolio of 30 or more years, and in such a case, the retirement saving plan becomes so essential. Rather than just depositing money in the portfolio, it should be used in investment opportunities to generate more wealth for old age. The objective is remaining invested—and that implies having some part of the money assigned to stocks, but in the right standing with other investments.

The objective of investing retirement portfolio is to generate a mix of investments that merge to preserve capital, create income, and expand. Such a combination of stock, bond and cash investments must be in line with age, income, financial needs, time, and risk. For this reason, we can say Violet’s retirement portfolio is very weak and inappropriate (Williams par 6).

Behavioral Corporate Finance

MEMO

TO: CFO

FROM:

DATE: 28/04/2019

RE: Recent Behavioral Finance Literature dealing with the Board of Directors.

We can study behavioral finance featuring the panel of executives under the concept of corporate governance ((Shivdasani, Anil, and Marc Zenner). Management of financial institutions has taken a different approach given the attrition of the significance of corporate governance in guiding financial decisions. Albeit, this is very recent studied by contemporary economists who assert the role of the board of governors in guiding the company’s value creation and improved financial performance particularly during this onset of consistent corporate flaws. Many companies have since collapsed, examples of Lehman Brothers, Rank Xerox, and Enron just to name a few, all blamed the faulty board of governors (Shivdasani, Anil, and David Yermack).

We have several lessons to learn from this shrinking–specifically–there is one lesson that stands out clear–the role of corporate governance in determining its capacity to contest positively particularly in stormy environmental conditions where others strive hard to exits.

Contemporary literature on behavioral finance vis-à-vis corporate governance emanates from Adolph, Berle and Means (23) study where they assert that, in reality, managers of companies sought their interest at the expense of the shareholders’ interests.  Their investigation stressed the need for an effective plan to help aid in mitigating the conflict of interests between company owners and managers. Therefore, while the concept of corporate governance might appear new, it addresses typical concerns present since time long (Ayuso, Silvia, and Argandoña 2-19).

Many countries, corporations, and agencies across the globe have started to respond to the corporate flaws by initiating a series of legislation and guidelines that guide decisions of the board of governors in financial implications. Such rules are referred to as the codes of best practices. These legislations guide the behavior and structure of the board of directors while doing their monitory and supervisory duties (Shivdasani, Anil, and David Yermack).

Such codes, though, issued in different regions, they have similar peculiarities regarding corporate culture and general corporate environment, and alignment of the interest of parties (Shareholders and Management). Corporate governance codification of governance aims at mitigating the corresponding deficiencies in or lack of appropriate shareholders shields (Shivdasani, Anil, and David Yermack).

Your Future and Behavioral Finance Post 2008

Behavioral Finance Lessons during and after the Great Recession

Several themes emerge drawing from the issues aired by Stephanie pertaining behavioral finance during and after the great recession. While the economic downturn attracted several consequences on the corporate world, I believe the corporate directors and other stakeholders had the mandate to prevent its occurrence, and correspondingly, they can stop the reoccurrence of the same by studying behavioral finance theories. The recession affected the entire globe since businesses collapsed, and many people lost jobs and houses. However, I believe that if financial behaviorist can avoid a repeat of the 2008 great recession, they should derive from behavioral finance theories, Shefrin and Staman reports this in their book, ‘Behavioral Finance in the Financial Crisis’.

Several factors drew the crisis, and such factors persist that perpetuate the current crisis. They include; a weak government regulation, investment banks that exceedingly leverage debts, and strained homeowners’ finances. We can explain the consequences of 2008 crisis from a financial theory basis. While traditional economics base their assumptions of rationality, they assert that people make rational economic choices as they try to maximize their earnings. On the contrary, behavioral economists assume that people make their financial selections based on their emotions psychological conditions, as well as on cognitive errors.

The 2008 crisis is best explained by the principles of behavioral economics. Here, we find a correlation of the crisis with the overly optimistic lending behaviors of people since such is connected to the stock market fluctuations even as witnessed currently. Psychologists have effectively documented the propensity of people to perceive the through rose-tinted lenses, often referred to as the optimism bias.

Much of the 2008 crisis revolved around financial psychology. We can study psychology as part of the behavioral finance theory. In essence, it incorporates aspects like overconfidence, perception and cognition, aspirations, emotions, and culture (Morgenson, Gretchen and Joshua Rosner).

Overconfidence– Behavioral economists had warned of the inhibiting economic crisis. While banks, businesses, and many corporations received such warnings, many were overconfident in their investments. Overconfidence Before the great 2008 recession, economists warned that the economy was going under. Entrepreneurs were such overconfident such that they hardly analyzed the risk of holding such huge portfolios in mortgage-backed securities, provided the threat of being in a bubble. Most of the homeowners took out loans just to satisfy the American dream — they purchased during a bubble overconfident that housing prices would skyrocket and remain persistent.

However, an increase in the housing market, and the stock market, only works to raise people’s overconfidence since they would ascribe the gains or losses they achieve as a result of their proficiency in finance, although, it results from market moods.

Recency bias was one implication that cultivated the crisis. That’s because entrepreneurs make choices based on the most recent information. Decisions may be constructed on the very latest feedback. Although, such information may not be primarily relevant. During the time, investors overreacted because of the congress’s finance rescue project.

Similarly, people’s emotions such as anger, fear, and sadness influence the type of decisions made, including economic choices. More fearful people become risk-averse, but more angry people become more enthusiastic to incur risks, even financial risks. As for the economic downturn, people had others in mind to accuse of the financial crisis. Take the example of Wall Street banks that became so angry such that they easily took the financial risk to punish the offenders.

Behavioral economists assume that the kind of financial errors made aren’t haphazard, and the choice made too aren’t fundamentally rational. Rather, they are built on psychological conditions such as cognitive errors and biases.

In our attempts to evade the similar crisis in our market, we can learn a lot from the economic downturn of 20008 and the related occurrences of the past. For instance, the 1974-75 economic recession almost resembled the 2007-2009 crisis. On the same note, the twin Reagan-era recessions of the 1980s had profound consequences such as joblessness and a subsequent S&L and sovereign debt crunch. The 1990s foreign currency crisis mandated an immediate discarding of the Long-Term Capital Management without interfering with the worldwide economic system. Just like Lipsky reports, the 2008 housing bubble was a consequence of a simmering stock market.

Hindsight bias wrongly predisposes us to imagine we can see and analyze the future crises pretty well the way we do the previous and establish strategies that would impede future crises. However, we are limited to devise policies that can avert future crises should we even be able to identify them since those who would lose are in our paths standing against us. No doubt restraining bank leverage would do some good; nonetheless, bankers have the smack to strangle it. Consequently, we have a few decision left–our psychological fallibilities. Assessing our psychological biases will work a great deal in averting and mitigating some crises.

Conclusion

From the discussion above, behavioral finance case studies focus on determining the clear-cut direction to which various market forces—such as rational analysis of organization-specific and macroeconomic basics; cultural, human and social psychology trends—affect investors and managers expectations and define their level of confidence.

Works Cited

Adolph, Berle, and Gardiner Means. The Modern Corporation and Private Property. New York, NY, Macmillan, 1932.

Allais, M. “Le Comportement De L’homme Rationnel Devant Le Risque: Critique Des Postulats Et Axiomes De L’ecole Americaine.” Econometrica, vol 21, no. 4, 1953, p. 503. JSTOR.

Ayuso, Silvia, and Antonio Argandoña. “Responsible Corporate Governance: Towards A Stakeholder Board of Directors?” SSRN Electronic Journal, 2009, p.2-19. Elsevier BV.

Benz, C. “The Bucket Investor’s Guide to Setting Asset Allocation for Retirement.” News.Morningstar.Com, 2016, par 3.

Ising, Alexander. “Pompian, M. (2006): Behavioral Finance And Wealth Management – How To Build Optimal Portfolios That Account For Investor Biases.” Financial Markets and Portfolio Management, vol 21, no. 4, 2007, pp. 491-492. Springer Nature.

Lipsky, J. Overcoming the Great Recession An Address to the Japan National Press Club, Remarks by John Lipsky, First Deputy Managing Director of the International Monetary Fund, at the Japan National Press Club, Tokyo, May 18, 2009. Tokyo: Japan National Press Club, 2009.

Morgenson, Gretchen, and Joshua Rosner. Reckless Endangerment: How Outsized Ambition, Greed, And Corruption Led To Economic Armageddon. New York, New York, St. Martin’s Griffin, 2012.

Shefrin Hersh, &Meir Statman. Behavioral Finance in the Financial Crisis: Market Efficiency, Minsky, and Keynes. Santa Clara: Santa Clara University, 2011.

Shiller, Robert J. “Bubbles, Human Judgment, and Expert Opinion.” Financial Analysts Journal, vol 58, no. 3, 2002, pp. 18-26. CFA Institute.

Shivdasani, Anil, and David Yermack. “CEO Involvement in the Selection Of New Board Members: An Empirical Analysis.” The Journal of Finance, vol 54, no. 5, 1999, pp. 1829-1853. Wiley-Blackwell.

Shivdasani, Anil, and Marc Zenner. “Best Practices In Corporate Governance: What Two Decades Of Research Reveals.” Journal of Applied Corporate Finance, vol 16, no. 2-3, 2004, pp. 29-41. Wiley-Blackwell.

Thaler, Richard H., and Shlomo Benartzi. “Save More Tomorrow™: Using Behavioral Economics To Increase Employee Saving.” Journal of Political Economy, vol 112, no. S1, 2004, pp. S164-S187. University Of Chicago Press.

Williams, Rob. “Plan, Allocate and Distribute: Structuring Your Retirement Portfolio for Your Income Needs.” Par 6. Schwab Brokerage, 2017.

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Psychological Testing Research Paper

Measurement is a very critical aspect of any psychology topic or basically, in all psychology sub- areas. Every psychologist is usually concerned with measuring the children`s intelligence, creativity and also in measuring their moral development. The psychological tests are used to help the clients learn what careers are best for them. This is based on the interests and the abilities of the clients. Similarly, in this course, description of how learning occurred and how learning can be facilitated in the near future. Therefore, psychological testing is the use of psychological tests, which are ideally designed to be an objective and the standardized measure of a sample of behavior (Garber and Simon, 2017).

Psychological assessment is the main process of testing that makes use of a combination of techniques to help realize some given hypothesis about a person and their behavior, personality, and capabilities. From the description of psychological assessment, it has been defined as an act of performing a psychological battery on an individual. It is also the process of psychological testing (Garber and Simon, 2017). This research paper will, therefore, address different types of psychological tests, various theories in psychological tests and also a variety of standardized tests of intelligence, personality, achievement, interest, neuropsychology and several other areas of psychological testing as described in the Course description.

Psychological Testing Principles

Emphasizes the principles by which psychological tests are conducted is quite important. There are several contradictions when it comes to the use of psychological tests. Psychological tests should be well examined to ensure that, there is valid, appropriate and also the fair use of psychological tests.

There are key concepts that are discussed in this research paper and these include studying the importance of psychological testing (Garber and Simon, 2017). Psychological testing allows researchers and psychologists to make concrete decisions about people, early school placement, military job selections and also in other fields like college entry behavior. Secondly, based on our course teachings, psychological testing allows us to vividly describe and also understand an individual`s real behavior (Garber and Simon, 2017). Below are several other additional reasons for carrying out psychological testing/ assessment;

-It is a measure of a person`s personal attributes- Psychological testing helps the learner to understand an individual`s behavior. Understanding a person`s behavior is quite important since it helps researchers and learners realize/ judge a person based on his/ her way of behaving.

Psychological Testing
Psychological Testing

It is a way of measuring performance- Individual performance is quite important. People would often need to be assessed how they have performed within a specified period of time. Therefore, in this case, psychological testing would help us realize a persons performance in his or her field of specialty. This is one of the key reasons why psychological testing was devised and should be embraced.

  • Saves time. It is a time-saving means of evaluating an individual`s performance in a certain field.
  • It is, of course, the most economical means of achieving a person`s performance.
  • Similarly, the process of psychological testing is basically scientific. Therefore, testing is expected to have the best results in any experiment.

There are basic psychological testing terms that have been explored in this course. As part of the course objectives, it is important to define, describe and also identify these basic testing terms (Garber and Simon, 2017). Such terms include theory, assessment, attitude, personality, measurement, validity, reliability, operational definitions, statistics, average, central tendency, correlation, bias, battery, criterion, decile, standardization, derived score, Level of significance, sample, prediction, randomness, measurement scale, stratification, norms, distracters and factor.

As part of this research paper, definitions of some of these terminologies will be analyzed. For instance; -Theory- theory refers to an idea that is used to account for or even justify a psychological situation.

  • Sample- it refers to a set of collected data that is used for psychological testing and analysis.
  • Measurement scale- it is the basis that is basically used for the psychological tests.

This research paper also addresses uses and various varieties of the personality tests. The main aim of this is to determine which tool is the best for predicting and also measuring the behavior of an individual/ a person (Rappaport et al, 2017). Establishing the validity of the personality tests is again quite important in psychology. Personality tests are an example of psychological tests that have been handled in this course. It is usually used to measure and also evaluate the behavior of a person in school and several other social places. This test basically identifies differences in personality between persons who are being subjected to the similar test.

Personal tests are basically the best psychological tests to use according to a number of psychological researchers. Again in this research paper, the question, “which is a better tool to predict the behavior of an individual, is it the personality test or the projective test?” This is one research problems that have been identified in the course. The research problem can, therefore, be reviewed (Garfinkle and Richardson, 2018). This can be reviewed in terms of whether the personality tests, observation and also the inventories are more reliable and also predictive in determining the behavior of a person.

The hypothesis for this research paper is based on using personality inventories and the projective tests and determining which is better in assessing of a person`s behavior. Using research design and the descriptive correlational methodology is the best approach for the researcher. Descriptive psychological tests are therefore tools that are used to measure and predict the behavior of humanity (Garfinkle and Richardson, 2018). However, both personality tests and the projective tests are used to assess the personalities of individuals in different environments, for instance, school and community. Psychological tests can be applied in various instances. For example, organizations worldwide are busy striving to be successful in the best ways possible.

Aptitude testing is another form of testing that has been described in the course. It is the second widely used form of psychological test after the personality test. It can interchangeably be used with the term ability. The concept of ability in the aptitude test can be described as a general character of an individual that can ideally facilitate the learning of the various skills.

From aptitude definition, it is then easier to state that, psychological tests are basically standardized measures of a small sample of an individual`s behavior (Garfinkle and Richardson, 2018). For instance, a chemist can infer the characteristics of a large compound by only testing a few cubic centimeters of a liquid. Similarly, quality engineers only test a small sample of the finished products and not all of them. The same concept is applied by psychologists in coping with test results. They only base their work on a small sample to come up with results for a larger population.

In aptitude testing, there is a need to establish the difference between aptitudes and the abilities. Ability tests are basically given with an option of giving a dire prediction about a person`s future success in his or field of work, mostly occupational activity or even group of activities. However, it’s possible to use the term aptitude in place of the term, ability (Garfinkle and Richardson, 2018). There are several ways of describing aptitude tests. These include being described in the mode in which they are being presented and also be grouped based on their content.

Conclusion

Psychological testing and assessment are conducted for a number of reasons. For instance;

  • Detection of specific behavior- psychological tests are basically used to determine the abilities of a person.
  • Individual differences- Psychological tests are again used to determine the individual differences. This ideally shows the difference in a person`s ability. The person`s performance is also determined through psychological testing (Rappaport et al, 2017).
  • To diagnose by the psychological test- These tests are also used in clinical psychology. This can be used to diagnose mental disorders among individuals.
  • Legal classification- Psychological tests basically help researchers to identify people into different categories. These categories can be normal and abnormal, criminal and innocent, intellectual and mentally disabled and lastly, the able and the disabled.
  • Promoting Self -understanding- this is another function that psychological testing does. It, therefore, provides standardized knowledge about the person`s behavior, aptitudes and also capabilities.
  • Program evaluation- Psychological testing can be used for such measures as program evaluation (Kaplan and Saccuzzo, 2017).
  • Scientific research- psychological researchers use psychological testing for the purpose of research. It, therefore, provides knowledge about the person`s mental level (Chukhraiev, 2017).
  • Military selection- Psychological testing is used during military selection.

References

Chukhraiev, N., Zukow, W., Chukhraieva, E., & Unichenko, A. (2017). Integrative approach to reduction of excess weight. Journal of Physical Education and Sport17(2), 563.

Garber, B. D., & Simon, R. A. (2017). Individual Adult Psychometric Testing and Child Custody Evaluations: If the Shoe Doesn’t Fit, Don’t Wear It. J. Am. Acad. Matrimonial Law.30, 325.

Garfinkle, M. S., & Richardson, S. L. (2018). Psychological Testing for Psychoanalysis. Psychoanalytic Trends in Theory and Practice: The Second Century of the Talking Cure, 269.

Kaplan, R. M., & Saccuzzo, D. P. (2017). Psychological testing: Principles, applications, and issues. Nelson Education.

Rappaport, S. R., Gould, J., & Dale, M. D. (2017). Psychological Testing Can Be of Significant Value in Child Custody Evaluations: Don’t Buy the Anti-Testing, Anti-Individual, Pro-Family Systems Woozle. J. Am. Acad. Matrimonial Law.30, 405.

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