In 1987 George Soros, building on work by Karl Popper and others, introduced his concept that the economy is a reflexive system. As Soros (2013) explains, "My conceptual framework is built on two relatively simple propositions. The first is that in situations that have thinking participants, the participants' views of the world never perfectly correspond to the actual state of affairs. People can gain knowledge of individual facts, but when it comes to formulating theories or forming an overall view, their perspective is bound to be either biased or inconsistent or both. That is the principle of fallibility. The second proposition is that these imperfect views can influence the situation to which they relate through the actions of the participants. For example, if investors believe that markets are efficient then that belief will change the way they invest, which in turn will change the nature of the markets in which they are participating (though not necessarily making them more efficient). That is the principle of reflexivity."
INET Oxford researchers, led by Eric Beinhocker, are exploring the philosophical and methodological implications of reflexivity. Notably, the connections between reflexivity theory and complex systems theory, and the epistemological and ontological implications of reflexivity for economics status as a science. The group is also looking at methods for formally modelling the economy as a reflexive system using agent-based modelling and game theory. In 2013 the group collaborated with the editors of the Journal of Economic Methodology to produce a symposium on reflexivity with contributions from 18 leading scholars and also held two workshops on reflexivity with its partner Central European University.