The word theory has many different definitions. In psychology as well as other sciences the word theory is a tested and testable concept which is used to explain an occurrence. In science, theories are created by observing and testing. They are meant to clearly define a phenomenon. However a theory is not a fact. Psychologists usually test out their theories numerous times, looking for problems that could cause the theory to be challenged, but a theory is never 100% correct.

Smith, S E. What is a Theory? Ed. S E. Smith. 2003. google. 10 Nov. 2008 <http://www.wisegeek.com/what-is-a-theory.htm>.