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This article aims to improve theory formation in psychology by developing a practical methodology for constructing explanatory theories: theory construction methodology (TCM). TCM is a sequence of five steps. First, the theorist identifies a domain of empirical phenomena that becomes the target of explanation. Second, the theorist constructs a prototheory, a set of theoretical principles that putatively explain these phenomena. Third, the prototheory is used to construct a formal model, a set of model equations that encode explanatory principles. Fourth, the theorist investigates the explanatory adequacy of the model by formalizing its empirical phenomena and assessing whether it indeed reproduces these phenomena. Fifth, the theorist studies the overall adequacy of the theory by evaluating whether the identified phenomena are indeed reproduced faithfully and whether the explanatory principles are sufficiently …