reinforcing feedback loops

A reinforcing feedback loop is a process where an initial change triggers effects that further enhance or amplify that change. For example, in finance, when investments perform well, returns increase, leading to more investments, which can boost returns even more. This creates a cycle where stronger outcomes lead to even stronger future outcomes. Reinforcing loops can accelerate growth or decay, depending on the situation. They tend to be self-perpetuating until external factors intervene or limits are reached. Understanding these loops helps explain how certain trends can rapidly grow or decline over time.