Plausibility Theory

Posted in Marketing and Strategy Terms, Total Reads: 842
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Definition: Plausibility Theory

Plausibility theory seeks to provide us with a systematic way to resolve cognitive dissonance.

It accesses the range of possible outcomes like all the other theories but it focuses on the probability of hitting a threshold point or a highest point.

Such as the net loss faced if a particular amount of risk is taken.

It helps in explaining the taking of unknowable risks.

Example: -In general a profitable decision is rejected if there is a possibility of making loss by more than 2%.

 



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