Karl Popper and George Soros’ Views on the Financial Markets Performance

Abstract

Since 1987, Georg Soros has contended that financial markets are affected in their performance by what he calls reflexivity. According to him, agents expectations about certain economic situations (and also social ones) make them act in ways which are moulding the course of events in an unforeseeable way. As a result, former expectations become spurious. With respect to that, this paper compares the formulation of the problem by Karl Popper — the so-called Oedipus Effect — and the principle of reflexivity proposed by George Soros for the study of financial markets. It also considers the impact of Popperian ideas in that practical realm of economics.