Glossary term
Reflexivity (Markets)
A feedback loop where a market price influences the very outcome it is trying to predict.
Reflexivity is the feedback loop where a market price influences the very outcome it is trying to predict, rather than passively reflecting it. In prediction markets this is acute: a contract showing a candidate as likely to win can shape donor behavior, media coverage, and turnout, bending reality toward the forecast. Reflexivity is a structural reason prediction-market prices can be self-fulfilling and should not be read as neutral probability. See Prediction Market Risk 101.