Soros: General Theory of Reflexivity

While Soros focuses on the principle of reflexivity in financial markets, it operates in many other domains of life. People worry about what other people will think before they say something—which affects what they say. In other words, our perception of reality changes reality by altering the way we might otherwise act. This leads to a self-fulfill

Reflexive processes that become historically significant tend to follow an initially self-reinforcing, but eventually self-defeating, pattern.

There are shades of Soros’s reflexivity here. The market depends to some extent on the thinking of those participating in the market about the market. This is sometimes called a Keynesian beauty contest, after Keynes’s analogy of judging a beauty contest not on the basis of who you think is most beautiful, but on the basis of who you think others w

There are shades of Soros’s reflexivity here. The market depends to some extent on the thinking of those participating in the market about the market. This is sometimes called a Keynesian beauty contest, after Keynes’s analogy of judging a beauty contest not on the basis of who you think is most beautiful, but on the basis of who you think others w

Our understanding of the world in which we live in is inherently imperfect. There is always a discrepancy between the participants' views and expectations and the actual state of affairs. Sometimes the discrepancy is so small that it can be disregarded but, at other ties,

Reality is a moving target because it is affected by our understanding.

The imperfection relates not only to our understanding, but also to the situation in which we participate, the reality we seek to understand.