Reflexivity

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 Use Property

    A type of property that an individual does not use for business ...
Related Articles
  1. Managing Wealth

    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. Investing

    8 Common Biases That Impact Investment Decisions

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

    7 Controversial Investing Theories

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

    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 ...
  5. 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.
  6. Markets

    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 ...
  7. Trading

    Behavioral Finance: Key Concepts - Confirmation and Hindsight Bias

    By Albert PhungKey Concept No.3: Confirmation and Hindsight BiasesIt's often said that "seeing is believing". While this is often the case, in certain situations what you perceive is not necessarily ...
  8. Entrepreneurship & Small Business

    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.
  9. Trading

    Behavioral Finance: Conclusion

    By Albert PhungWhether it's mental accounting, irrelevant anchoring or just following the herd, chances are we've all been guilty of at least some of the biases and irrational behavior highlighted ...
  10. Managing Wealth

    Common Interview Questions for Personal Bankers

    Discover how to prepare for your next personal banking job interview by showing your passion for personal finance and desire to help people reach their goals.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  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. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center