What is 'Reflexivity'

Reflexivity is the idea that a person's thoughts and ideas tend to be inherently biased. In other words, the values and thoughts of a person will be represented in their work.

In the context of finance, the theory of reflexivity states that investors' and traders' biases can change the fundamentals that assist in determining market prices.

BREAKING DOWN 'Reflexivity'

There are two types of reflexivity: personal and epistemological. Personal reflexivity refers to how a person's values, beliefs, acquaintances and interests influence his or her research or work. Epistemological reflexivity attempts to identify the foundations of knowledge and the implications of any findings.

RELATED TERMS
  1. Bias

    Biases are human tendencies that lead us to follow a particular ...
  2. Personal Finance

    All financial decisions and activities of an individual or household, ...
  3. Personal Representative

    The executor or administrator for the estate of a deceased person. ...
  4. Personal Interest

    Interest that taxpayers pay on personal and consumer loans. Personal ...
  5. Biased Expectations Theory

    A theory that the future value of interest rates is equal to ...
  6. Personal Income

    Total compensation received by an individual. Personal income ...
Related Articles
  1. Investing

    Behavioral Bias - Cognitive Vs. Emotional Bias In Investing

    We all have biases. The key to better investing is to identify those biases and create rules to minimize their effect.
  2. Financial Advisor

    8 Common Biases That Impact Investment Decisions

    Behavioral biases hit us all as investors and can vary depending upon our investor personality type.
  3. Financial Advisor

    Behavioral Finance: How Bias Can Hurt Investing

    Here are three cognitive biases from behavioral finance that investors would do well to be aware of to avoid making poor investment decisions.
  4. Investing

    7 Controversial Investing Theories

    We take a closer look at the theories that attempt to explain and influence the market.
  5. Investing

    5 Mental Mistakes That Affect Stock Analysts

    They know more about stocks than the average person, but analysts are still affected by biases. Find out what they are.
  6. Investing

    Modern Portfolio Theory vs. Behavioral Finance

    Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions ...
  7. Financial Advisor

    Advisors: Watch Out for Confirmation Bias

    Here's how advisors can make sure that confirmation bias does not color their own perceptions as they manage clients’ portfolios.
  8. Investing

    Top Reasons Stock Indices Could Be Biased

    Do the owners of the large stock indices (McGraw Hill Financial, CME Group, and News Corp) have incentive to pick stocks to put in the index that are "shiny" as a marketing ploy? And if so, wouldn't ...
  9. Investing

    Using Licensing to Rent Your Ideas to Large Companies

    Learn how to license your ideas to get your groundbreaking product on the shelves without raising capital or having business expertise.
RELATED FAQS
  1. What sectors have higher exposure to inherent risk?

    Learn how inherent risk in certain sectors, such as financial services, banking, energy and utilities, can pose significant ... Read Answer >>
  2. Can personal loans be transferred to another person?

    Learn whether it is possible to transfer a personal loan to another person, and find out what happens when you default on ... Read Answer >>
  3. How does behavioral economics treat risk aversion?

    Learn about the relationship between decision-making and risk, as described by one of the foundational theories in behavioral ... Read Answer >>
  4. Is a good's production cost related to its value?

    Learn about the history and debate regarding the metrics used to determine the value of a good and which theories place emphasis ... Read Answer >>
  5. What's the difference between agency theory and stakeholder theory?

    Learn how agency theory and stakeholder theory are used in business to understand common business communication problems ... Read Answer >>
  6. What is the chaos theory?

    The chaos theory is a complicated and disputed mathematical theory that seeks to explain the effect of seemingly insignificant ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center