Reflexivity

Traditionally, we assume there exists an objective fact that could be validated, and knowledge is the process of our gathering of information and synthesis of idea to understand the objective fact. Our great hedge fund manager reminded us that, at least in the field of social science, our idea often form the basis of the objective fact.

(I said remind because the idea is not entirely new. A very similar theory was proposed by Aristotle over 2000 years ago.)

For example, Barack is a man is a scientific description, which has objective criteria and could be validated (to be either true or false). The important point is: whether Barack is a man or not does not depend on your opinion or description.

But, when we consider the description Barack is our enemy, it becomes a different ball game. Yes, there remains criteria for validation, but the objective fact could in itself be altered if we accept the description. In other words, if we see Barack as our enemy, he will sure be. It is, in essence, a reinforcement cycle and self-fulfilling statement.

Soros called it reflexivity.

PS. The best example by the hedge fund manager is, of course, if everyone believes that the stock price would go up, it sure will.

PPS. Seasoned medical students would find my example somewhat familiar. As Virgil said, Hos successus alit; possunt, quia posse videntur. (Success nourished them; they seemed to be able, and so they were able.)