Reflexivity is a concept introduced by the investor and financial expert George Soros, which refers to the idea that the relationship between an individual’s beliefs and the reality they are observing is a two-way street.
In other words, our beliefs and expectations about the world can actually influence the way the world behaves, rather than just being passive reflections of it.
Soros believes that this concept is particularly relevant to financial markets, which he argues are not always efficient or rational, but are instead influenced by the beliefs and actions of the people participating in them. This feedback loop between beliefs and reality can lead to self-reinforcing cycles of behavior in financial markets, where rising prices lead to more optimistic beliefs, which in turn lead to further price increases, and so on. However, these cycles can also be fragile and prone to sudden reversals if new information or events cause beliefs to shift in the opposite direction.