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Can observers observe the economy from outside? Recent developments in economic sociology tend to blur the classic distinction and combination of economy and society and to move to a condition in which the observer (each observer) is inside the society he describes. The behavior of financial actors can be analyzed combining two concepts with a long tradition and many implications: beauty contest and moral hazard – and can then be translated into the terms and the tradition of observation theory. Keynes’ beauty contest can be interpreted as a systematic recognition of second-order observation: financial operators observe primarily other observers and what they observe. This observation produces particular circularities – first of all the insoluble problem of moral hazard, which reproduces in the field of finance Merton’s famous model of self-defeating/self-fulfilling prophecies.