Soros's Reflexivity Concept in a Complex World: Cauchy Distributions, Rational Expectations, and Rational Addiction
Journal of Economic Methodology 20 (4):368-376 (2013)
AbstractGeorge Soros makes an important analytical contribution to understanding the concept of reflexivity in social science by explaining reflexivity in terms of how his cognitive and manipulative causal functions are connected to one another by a pair of feedback loops (Soros, 2013). Fallibility, reflexivity and the human uncertainty principle. Here I put aside the issue of how the natural sciences and social sciences are related, an issue he discusses, and focus on how his thinking applies in economics. I argue that standard economics assumes a ‘classical’ view of the world in which knowledge and action are independent, but that we live in a complex reflexive world in which knowledge and action are interdependent. I argue that Soros's view provides a reflexivity critique of the efficient market hypothesis seen as depending on untenable claims about the nature of random phenomena and the nature of economic agents. Regarding the former, I develop this critique in terms of Cauchy distributions; regarding the latter I develop it in terms of rational expectations and rational addiction reasoning.
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References found in this work
The General Theory of Employment, Interest and Money.John Maynard Keynes - 1936 - Macmillan.
Fallibility, Reflexivity, and the Human Uncertainty Principle.George Soros - 2013 - Journal of Economic Methodology 20 (4):309-329.
The Common Prior Assumption in Economic Theory.Stephen Morris - 1995 - Economics and Philosophy 11 (2):227.
Reflexivity, expectations feedback and almost self-fulfilling equilibria: economic theory, empirical evidence and laboratory experiments.Cars Hommes - 2013 - Journal of Economic Methodology 20 (4):406-419.