Reflexivity_In Short

In short, Reflexivity does...

Bias is often assimilated by problems that people deem salient, which results in a hierarchy based reasoning, if ranked according to importance, hence creating decisions implied by biases through different degree of importance of bias ranking.

Reflexivity_In Short

Reflexivity_The What 3

Reflexion is a concept that incorporates the concept of likelihood of prevailing and the degree of prevailing of a perceived event.

Often there are quite an amount of probabilistic events that could take place at any single time. Any probabilistic event is in fact an outcome of people’s biases and limitation of rationality. The occurrence of probabilistic events is inevitable as every single second people have to make a lot decision that could alter the outcome. Explaining this, it is also vital for people to understand that, of course, probabilistic events also included unforeseen circumstance brought about by the nature elements.

The probabilistic event that has the highest chance to prevail simply means that most of the people have reached to a certain degree of bias consensus. Or precisely, it is the similarities in the very much vary biases that have reached people to a consensus.

Differences in bias, to some extent, create an effect that is of opposite direction. In fact, this is what helps categorizing people into different types of extremists.

The similarities in biases of people push the biases & distortions to its peak. The time taken for the biases to reach to the peak vastly depends upon the degree of similarities of the biases. The linear relationship between the two explains that when the degree of similarities is higher, then bias consensus will reach faster.

Higher bias consensus pushes prevailing bias to its peak, which leads to higher visibility the distance in between truth and distorted fact, will be identified and ultimately subjecting itself to a near term correction.

That being explained, it also means that higher bias consensus not only pushes prevailing bias to its peak, it also directly hasten the time period of which correction may begin. This by high chance will also create an exponential effect in the degree of correction.

To be more precise, the degree of correction has high chance of being caused by the degree of bias consensus.

The failure to reach to a bias consensus causes the market to prevail sideways, as extremist each has numerous plausible important factors to defend their own stance. This failure to reach to a bias consensus may only sustain for a short period of time for the flow and update of information in the new world is tremendously rapid. As you can see then, the updates of information contributes to the enhancement of weakening of one’s biases.

It is also important to know that people generally do not favor market that goes sideways. It is because it will fog up the visibility of market direction. This causes disturbance of emotions in people especially to those who lack of patience, causing them to take actions that maybe are not adequate. These spasms had little good, for it will again further smoke the visibility of market.

Reflexivity_The What 3

Reflexivity_ What is.

However, biases and distortion produce a false reality, the repulsion in between actual reality and false reality will take place somewhere in the future for the gap has widen so much that facts are already far behind the supposed-equilibrium, needless to mention the supposed actual course of outcome. This will imminently bring to a correction that is so much needed for the placement of actual reality into the outcome that it is supposed to be, albeit already late.

Explaining equilibrium, it is that theorists generally assume people have perfect knowledge, perfect timing as well as perfect decision making and perfect rationality. This ultimately is not, to be precise, even possible or exist in the world of ours that on the appearance appear to be relatively easy but utmost complex in terms of specification. This proves it renders theories that require ceteris paribus, or equilibrium or perfect assumption invalid in the sense of practicability in the real world. Such easily falsifiable theory holds but untruthful rationale of human thinking.

The result:

The result created by each and every individual could be different or same each depending on their perceptions and degree of biases & distortions held in relation to knowledge & facts available to them. It must be known that people generally cannot know what others are thinking about in full. Also, the underlying types and degree of biases & distortions they have in decision making process cannot be known in full too.

The lack of existence of mutual understanding in between people’s notion creates differences in each and every decision individual makes, for the decision is perceived to have sustained one’s competitive advantage the others do not see or do not see. The competitive advantage one reckons he has is also not equivalent to the competitive advantage the others have.

Explaining this, it is also important for people to know that the degree of competitive advantage is also largely different. For example, the competitive advantage of A is 1 whilst the competitive advantage of B is 1+2. A does not know B’s competitive advantage and B does not know A’s competitive advantage. A reckons his competitive advantages is the best for he himself whilst B reckons his competitive advantage is best for himself. But it could be that A actually has lower competitive advantage compared to B and vice versa depending on situations and factors taken into consideration. But of all, the general understanding is that individual does not know the type and degree of competitive advantage of each other.

Does the difference in decision making then, helps to create a wider gap in between underlying reality compared to distorted facts? This is a question worth pondering at. The abstract answer for this lies unknown when facing different situations. In some situations, I believe the gap can be reduced. And in some other situations, the gap can be widened. The notion to this result is that the distortion may favors the underlying actually reality or repels it further from reality. This is due to that the complexity of little components that people included when creating a perception of their own is inexplicable.

Coming to this, it is important to adhere the significance of certain criteria when making a decision, that is, the usual facts that people perceive as the main driver of any possible prevailing event. The significance of the main drivers will help to widen or reduce the gap in between outcome and underlying reality, which can be taken as a probability of prevalence. This main driver is sort of like a ground rule to make any further progress to decision making.

The thinking involves too much of complexity that one is not even aware of, but for every notion one has, it certainly has generated certain justifiable reasons for people to adopt it be it correct or incorrect in the knowledge of others. It is at least, correct in the eye of beholder. Understanding this can aid people in realizing the biases they might have and also the distortions they might have in brain with intermediate probability depending on one’s level of revelation.

How then, one realizes about the actual course of underlying reality? This proves to be very vague, because the perception of everyone, I believe, underlies a certain degree of truth and reality. And there certainly has no way to measure or justify it by full definition. The truth is then, I shall say, always skewed and hence there never was equilibrium.

Probably also, there could be nothing hold as truth, or the truth only holds a second long, for the subject of a matter and its factors changes every split second in the modern world. However, I sincerely believe a degree of truthfulness of any circumstance do exist, by also incorporating the notion of opportunity cost.

To sum up in this chapter, I would say that perfect understanding or interpretation of information do not exist, the existence is only the degree to which it is skewed from the truth, for the rationality of every single individual is flawed and limited. This makes biases and distortions imminent.  

Reflexivity_ Cont'

Reflexivity_The What

Reflexivity refers to the circular relationship of an action and the result. For one’s rationality is so limited, the action, which first requires certain flows of thinking and decision making, will too be biased. The bias creates a gap that exists but abstract to recognize of its existence and gets more visible only in the longer term or could be seen in the shorter term by those who have less biases in thinking. This visibility also vastly depends on the degree to which the facts are distorted. Certainly, higher gap and higher distortions of facts enable people to notice it at a shorter term, but does not create an imbalance advantage unless one is more rational than the rest. The lack of imbalance advantage in this case is due to that when visibility is clearer; more people will be able to notice it hence offsetting the advantages one can get.

 A wider gap is subject to a wider correction in the market in days to come, for the distortions and biases will be noticed as it become more visible when time goes by. This will enable a clearer looking at available gap and fact which causes the call of the nature of human to act upon it. Therein, when people started to take action against the existing distortions and bias, the cycle of correction then begins.

The distortions and bias can be perceived as general blind spot when the level of rationality one has is more or less equivalent to the level of rationality another has. This standardized level of rationality is often influenced and caused by widely accepted methodology of herd’s practices or opinions and etc. Hence causing it to be unidentified albeit existing for a certain time period and continue to prevail. The bias also continues to persist with the aid of the unavailability of control and the flaw exists in one’s emotion. All these, help keeping the bias to continue to grow and widen the gap of relationship between bias and fact until the correction phase begins.

On the other hand, a means of correction does not mean that the market is utterly going on the correct path, or more precisely, to what extent or level the market should react until. As there is no doctrine for this question, a whole new bias, after minus out the standardized rationality one holds, will seize the primary positioning factor in the market, often then causing an overreaction in the market in the phase of correction to the extent of over-correction.

The new bias, like it was before, is born, but heading to the opposite direction of where it was. With the existence of new bias, or continuous bias as I perceive it to be, the equilibrium will not be reached and a new gap will exist, of course, in an opposite direction of what it was. To one’s knowledge, the theory of equilibrium is so theoretical that it hardly shows up in the reality or maybe none at all shows up. This associate not only with humans’ flawed and lack-of-control on emotions but also with cognitive biases everyone holds differently on mind, hence giving the distortion a double dose effect and continually skewing the result as it should be.

The bias will be continuous and will never end. Maybe one can state this as one of the biggest flaws in humans’ rationality that fails to evolve from the time of existence of human. However, one must and should also understands that bias has its effect not only because of the lack of existence and the ability to perform better rationality, but also due to one’s powerful emotions.

Next, the flaw in the theory of rational behavior lies at that it generally do not take into account the existence of bias as well as lack of accuracy of information and not to mention the difference in interpretation of given information. As a decision making process factors in many more other variables other that those stated above, such as emotions and environment, one can then understand that a person’s self reckoned best decision might not be the best alternative exist.

The gap in between the bias and fact exist when people do not perceive things the utmost rational way thus skewing the relationship or the outcome that it is suppose to result. The gap also widens when there are more participants, which means having more biases and the produce a more skewed result. And what is more important is there is no solution to prevent bias from assimilating one’s mind. All one could do is to improve the level of rationality one has and one can see things clearer than the others.

Reflexivity_The What