Been hearing about George Soros lately - his anti-Bush campaign. Came across this link regarding his views on reflexivity.
A quote to entice my SOM colleagues: "I am in fundamental disagreement with the prevailing wisdom. The generally accepted theory is that financial markets tend towards equilibrium, and on the whole, discount the future correctly. I operate using a different theory, according to which financial markets cannot possibly discount the future correctly because they do not merely discount the future; they help to shape it."
And one for Marta in particular: "Thinking participants cannot act on the basis of knowledge. Knowledge presupposes facts which occur independently of the statements which refer to them; but being a participant implies that oneís decisions influence the outcome."
I agree with him: "There is an active relationship between thinking and reality, as well as the passive one which is the only one recognized by natural science and, by way of a false analogy, also by economic theory. I call the passive relationship the ěcognitive functionî and the active relationship the ěparticipating function,î and the interaction between the two functions I call ěreflexivity.î Reflexivity is, in effect, a two-way feedback mechanism in which reality helps shape the participantsí thinking and the participantsí thinking helps shape reality in an unending process in which thinking and reality may come to approach each other but can never become identical."
He's applying this to financial markets, mostly; and I've applying it to human relationships, mostly.
He's been a hell of a lot more successful than me! %-)
Leave a comment