What is a Self Fulfilling Prophecy?
A Self Fulfilling Prophecy is a prediction that becomes true, as a consequence of the prediction existing. In economics, they are used to explain the role of expectations in the occurrence of events. For example, a self-fulfilling recession occurs following the expectation of a crisis, which causes investors and consumers to invest a smaller portion of their funds out of fear of losing money. It then results in slower economic activity, which leads to an economic recession.