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Normative theory

1) Explain situations where the opposite could be true In normative theory. For example: our personal experiences, educational levels, cultures, religions, and other aspects of our background can actually enrich our decision making ability.
2) Why does it appear that to be highly successful (particularly in a financial sense), we assume that the gains are achieved unethically?
3) Would you cite examples of how (or when) positive and normative theory are used together? What is the benefit of using both?
4) Which theory do you feel is more prevalent in today's business or political world and why?

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In normative theories, the opposite could be true. Essentially, normative theories explain what would happen under theoretical constraints. For example when economic laws like the law of demand are stated, the economists mention, ceteris paribus. In real life, all other things do not remain constant. Personal experiences, educational levels, cultures, religions, and other aspects actually enrich decision making ability because these are not affected by theoretical constraints. For example, the stock markets are supposed to be perfect markets but your personal experience says there are several imperfections. The knowledge of these imperfections enables you to make sound investments and avoid losses.

We assume that gains are achieved unethically because of the publicity accounting ...

Solution Summary

Normative theory is explained in a structured manner in this response. The answer includes references used.