This statement, taken from the below Bloomberg hagiography about George Soros, is a little misleading:
In reality, Soros says, misjudgments and misconceptions influence market prices, which in turn distort the fundamentals that they are meant to reflect. He calls this two-way feedback loop ``reflexivity,'' a concept influenced by the philosophy of Karl Popper.
Yes, Karl Popper (who was enormously influential on Mr. Soros's thinking as a professor to Soros at London Business School) "influenced" the theory of reflexivity. But "reflexivity" is not a new concept...more on that later.
Karl Popper is one of my idealogical heroes, and "Open Society and its Enemies" is required reading, but he certainly did not invent reflexivity or recursive systems.
But, giving due credit, Kurt Godel was the first to enumerate the curious behavior of functions which describe themselves. One could also argue that Darwin observed this as well in The Origin of Species.
There is a well-known saying among investors that "news follows price". In other words, you see the price action and a news article quickly follows explaining the reasons for the movement...this happens for the obvious reason that information is far more valuable when a small number of people have it.
In this case, "reflexivity" followed recursive functions and the math that came with it. And, in my humble opinion, it is in Mr. Soros's best interest to increase general anxiety in order to "reflexively" influence the upcoming election. Mr. Obama has very, very close ties with Mr. Soros.