Reflexivity: How Our Beliefs Change the Reality We Observe

Reflexivity: How Our Beliefs Change the Reality We Observe Most people assume that reality is something fixed and external -- that we observe facts, form beliefs, and then act on those beliefs. But what happens when our beliefs themselves start changing the very reality we are trying to observe? This is the core idea behind reflexivity, a concept popularized by billionaire investor George Soros, and it has profound implications for how we make decisions in markets, politics, relationships, and everyday life. What Reflexivity Actually Means Reflexivity describes a feedback loop between perception and reality. In a non-reflexive world, facts determine beliefs. In a reflexive world, beliefs also determine facts. The observer and the observed are not separate -- they influence each other in a continuous, self-reinforcing cycle. Consider the stock market. Traditional economic theory assumes that stock prices reflect fundamental values. Reflexivity says something different: when investors be