DEFINITION of 'Reflexivity'

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.

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