ReAct (Reasoning + Acting) is the foundational pattern for modern AI agents. Instead of just answering a question, the model emits a "Thought", then an "Action". The system runs the action and returns an "Observation".
Thought: I need to find the current price of AAPL. I will use the search_finance tool. Action: search_finance(ticker="AAPL") Observation: $195.50 Thought: Now I have the price. I can answer the user. Answer: The current price of AAPL is $195.50.