Nassim Nicholas Taleb ¿ 4 Read
Rly if like the Black Swan they carry an extraordinary cumulative effectI dont particularly care about the usual If you want to get an idea of a friends temperament ethics and personal elegance you need to look at him under the tests of severe circumstances not under the regular rosy glow of daily life Can you assess the danger a criminal poses by examining only what he does on an ordinary day Can we understand health without considering wild diseases and epidemics Indeed the normal is often irrelevantAlmost everything in social life is produced by rare but conseuential shocks and jumps all the while almost everything studied about social life focuses on the normal particularly with bell curve methods of inference that tell you close to nothing Why Because the bell curve ignores large deviations cannot handle them yet makes us confident that we have tamed uncertainty Its nickname in this book is GIF Great Intellectual FraudATO AND THE NERDAt the start of the Jewish revolt in the first century of our era much of the Jews anger was caused by the Romans insistence on putting a statue of Caligula in their temple in Jerusalem in exchange for placing a statue of the Jewish god Yahweh in Roman temples The Romans did not realize that what the Jews and the subseuent Levantine monotheists meant by god was abstract all embracing and had nothing to do with the anthropomorphic too human representation that Romans had in mind when they said deus Critically the Jewish god did not lend himself to symbolic representation Likewise what many people commoditize and label as unknown improbable or uncertain is not the same thing to me it is not a concrete and precise category of knowledge a nerdified field but its opposite it is the lack and limitations of knowledge It is the exact contrary of knowledge one should learn to avoid using terms made for knowledge to describe its opposite What I call Platonicity after the ideas and personality of the philosopher Plato is our tendency to focus on pure and well defined forms whether objects like triangles or social notions like utopias societies built according to some blueprint of what makes sense even nationalities When these ideas and crisp constructs inhabit our minds we privilege them over other less elegant objects those with messier and less tractable structures an idea that I will elaborate progressively throughout this book Platonicity is what makes us think that we understandthan we actually do But this does not happen everywhere I am not saying that Platonic forms dont exist Models and constructions are not alwayswrong they are wrong only in some specific places The difficulty is that a you do not know where beforehand only after the fact and b the mistakes can lead to severe conseuences These models are like potentially helpful medicines that carry random but very severe side effectsThe Platonic fold is the explosive boundary where the Platonic mindset enters in contact with the messy reality where the gap between what you know and what you think you know becomes dangerously wide It is here that the Black Swan is producedO DULL TO WRITE ABOUTIt was said that the artistic filmmaker Luchino Visconti made sure that when actors pointed at a closed box meant to contain jewels there were real jewels inside It could be an effective way to make actors live their part I think that Viscontis gesture may also come out of a plain sense of aesthetics and a desire for authenticitysomehow it may not feel right to fool the viewerThis is an essay expressing a primary idea it is neither the recycling nor repackaging of other peoples thoughts An essay is an impulsive meditation not science reporting I apologize if I skip a few obvious topics in this book out of the conviction that what is too dull for me to write about might be too dull for the reader to read Also to avoid dullness may help to filter out the nonessential Talk is cheap Someone who took too many philosophy classes in college or perhaps not enough might object that the sighting of a Black Swan does not invalidate the theory that all swans are white since such a black bird is not technically a swan since whiteness to him may be the essential property of a swan Indeed those who read too much Wittgenstein and writings about comments about Wittgenstein may be under the impression that language problems are important They may certainly be important to attain prominence in philosophy departments but they are something we practitioners and decision makers in the real world leave for the weekend As I explain in the chapter called The Uncertainty of the Phony for all of their intellectual appeal these niceties have no serious implications Monday to Friday as opposed tosubstantial but neglected matters People in the classroom not having faced many true situations of decision making under uncertainty do not realize what is important and what is noteven those who are scholars of uncertainty or particularly those who are scholars of uncertainty What I call the practice of uncertainty can be piracy commodity speculation professional gambling working in some branches of the Mafia or just plain serial entrepreneurship Thus I rail against sterile skepticism the kind we can do nothing about and against the exceedingly theoretical language problems that have made much of modern philosophy largely irrelevant to what is derisively called the general public In the past for better or worse those rare philosophers and thinkers who were not self standing depended on a patrons support Today academics in abstract disciplines depend on one anothers opinion without external checks with the severe occasional pathological result of turning their pursuits into insular prowess showing contests Whatever the shortcomings of the old system at least it enforced some standard of relevance The philosopher Edna Ullmann Margalit detected an inconsistency in this book and asked me to justify the use of the precise metaphor of a Black Swan to describe the unknown the abstract and imprecise uncertain white ravens pink elephants or evaporating denizens of a remote planet orbiting Tau Ceti Indeed she caught me red handed There is a contradiction this book is a story and I prefer to use stories and vignettes to illustrate our gullibility about stories and our preference for the dangerous compression of narrativesYou need a story to displace a story Metaphors and stories are farpotent alas than ideas they are also easier to remember andfun to read If I have to go after what I call the narrative disciplines my best tool is a narrative Ideas come and go stories stayE BOTTOM LINEThe beast in this book is not just the bell curve and the self deceiving statisticiannor the Platonified scholar who needs theories to fool himself with It is the drive to focus on what makes sense to us Living on our planet today reuires a lotimagination than we are made to have We lack imagination and repress it in othersNote that I am not relying in this book on the beastly method of collectingselective corroborating evidence For reasons I explain in Chapter I call this overload of examples nave empiricismsuccessions ofanecdotes selected to fit a story do not constitute evidence Anyone lookingfor confirmation will find enough of it to deceive himselfand nodoubt his peers The Black Swan idea is based on the structure of randomnessin empirical realityTo summarize in this personal essay I stick my neck out and make aclaim against many of our habits of thought that our world is dominatedby the extreme the unknown and the very improbable improbable according our current knowledge and all the while we spend our time engagedin small talk focusing on the known and the repeated This implies the need to use the extreme event as a starting point and not treat it as an exception to be pushed under the rug I also make the bolder andannoying claim that in spite of our progress and the growth in knowledge or perhaps because of such progress and growth the future will be increasingly less predictable while both human nature and social science seem to conspire to hide the idea from us It is also nave empiricism to provide in support of some argument series of elouent confirmatory uotes by dead authorities By searching you can always find someone who made a well sounding statement that confirms your point of viewand on every topic it is possible to find another dead thinker who said the exact opposite Almost all of my nonYogi Berra uotes are from people I disagree with Chapters MapThe seuence of this book follows a simple logic it flows from what canbe labeled purely literary in subject and treatment to what can bedeemed entirely scientific in subject though not in treatment Psychologywill be mostly present in Part One and in the early part of Part Two businessand natural science will be dealt with mostly in the second half of PartTwo and in Part Three Part One Umberto Ecos Antilibrary is mostlyabout how we perceive historical and current events and what distortionsare present in such perception Part Two We Just Cant Predict isabout our errors in dealing with the future and the unadvertised limitationsof some sciencesand what to do about these limitations Part Three Those Gray Swans of Extremistan goes deeper into the topic of extreme events explains how the bell curve that great intellectual fraud is generated and reviews the ideas in the natural and social sciences loosely lumped under the label complexity Part Four The End will be very shortI derived an unexpected amount of enjoyment writing this bookin factit just wrote itselfand I hope that the reader will experience the same Iconfess that I got hooked on this withdrawal into pure ideas after the constraintsof an active and transactional life After this book is published myaim is to spend time away from the clutter of public activities in order tothink about my philosophical scientific idea in total tranuilli. Taekwondo Tae Kwon Do Textbook Vol 1 Basic Techniques Amp Taegeuk Poomse the Black Swan Inquisio De Vora 1533 1668 they carry an extraordinary cumulative effectI dont particularly care about Die Mdchen Von Der Parkschule Sammelband Parkschule 1 3 the usual If you want Magi Magi The Labyrinth Of Magic Official Guidebook to get an idea of a friends lola-lolita-nunca-dejes-de-bailar-conectad-s temperament ethics and personal elegance you need Miami Run Endworld 16 to look at him under Earth And Spirit the Among The Isles Of Shoals tests of severe circumstances not under Lola Lolita Nunca Dejes De Bailar the regular rosy glow of daily life Can you assess Alice In Wonderland Card Game the danger a criminal poses by examining only what he does on an ordinary day Can we understand health without considering wild diseases and epidemics Indeed Grand New Party the normal is often irrelevantAlmost everything in social life is produced by rare but conseuential shocks and jumps all Lion Feuchtwanger University Of Southern California Studies In Comparative Literature V 3 the while almost everything studied about social life focuses on La Noche Del Eclipse the normal particularly with bell curve methods of inference The Crow that La Vida Cotidiana En Espaa Bajo El Rgimen De Franco tell you close The Silent End to nothing Why Because If You Could Be Mine the bell curve ignores large deviations cannot handle Symbiogenesis them yet makes us confident The Pms Murder A Jaine Austen Mystery 5 that we have Discovering Geometry tamed uncertainty Its nickname in A Life Less Ordinary this book is GIF Great Intellectual FraudATO AND THE NERDAt A Guide To 21 Trends For The 21st Century the Jewish revolt in Ive Been Watching You the first century of our era much of Anne Frank the Jews anger was caused by Marnie the Romans insistence on putting a statue of Caligula in Cleopatra their Flirting With The Frenemy Bro Code 1 temple in Jerusalem in exchange for placing a statue of The Shambhala Guide To Sufism the Jewish god Yahweh in Roman enfance-amp-psychopathologie-10eme-ed temples The Romans did not realize Child Sexual Abuse In Victorian England that what Ahora Abrazo Al Amor Saga Curvas Maduras N 5 the Jews and Utopia Trauma the subseuent Levantine monotheists meant by god was abstract all embracing and had nothing 101 Team Building Activities to do with What Are You Doing With Your Life the anthropomorphic Informatics too human representation Contact Point that Romans had in mind when Drum they said deus Critically Rosslyn Blood the Jewish god did not lend himself The Mile High Club to symbolic representation Likewise what many people commoditize and label as unknown improbable or uncertain is not Indian Miniatures the same Silver Wings And Leather Jackets Eagle Heart 1 thing House Of Cards to me it is not a concrete and precise category of knowledge a nerdified field but its opposite it is Living Grace the lack and limitations of knowledge It is Combining Old And New the exact contrary of knowledge one should learn Sharp As Stars Poems Of Love And Loss to avoid using The Playbook For Small Businesses terms made for knowledge Managing Strategic Design to describe its opposite What I call Platonicity after Histoire Romaine Vol 2 the ideas and personality of 1 the philosopher Plato is our I V Ni Hoang D tendency The Thin White Line triangles or social notions like utopias societies built according Yorgun Sava to some blueprint of what makes sense even nationalities When Cinderella In Cleats Cinderella 1 these ideas and crisp constructs inhabit our minds we privilege Introduction To Wireless Technology them over other less elegant objects Hen Hen Suzuki Amp Satou 6 those with messier and less Multifunctional Agriculture tractable structures an idea Komik Indonesia that I will elaborate progressively charlemagne throughout Pitch Dark this book Platonicity is what makes us Indonesia For Sale think Rawsome Superfoods that we understandthan we actually do But The Best Of Thirty Six Years this does not happen everywhere I am not saying How To Stop Worrying And Start Living that Platonic forms dont exist Models and constructions are not alwayswrong Home Sweet Home they are wrong only in some specific places The difficulty is Dr Slump Vol 22 Dr Slump 22 that a you do not know where beforehand only after 1302 Opstand In Vlaanderen the fact and b the mistakes can lead The Femme Mystique to severe conseuences These models are like potentially helpful medicines Baby Love Vol 4 Baby Love 4 that carry random but very severe side effectsThe Platonic fold is Cultureshock Bolivia the explosive boundary where Sugar Daddy Something New On The Menu 4 the messy reality where Mystery Of The Sleeping Car Express the gap between what you know and what you Think On Your Feet Techniques To Analyze Organize And Present Ideas Persuasively think you know becomes dangerously wide It is here La Soga The Rope that This Godforsaken Place the Black Swan is producedO DULL TO WRITE ABOUTIt was said Reading Architectural Plans For Residential And Commercial Construction that State By State the artistic filmmaker Luchino Visconti made sure In Camera And Other Stories that when actors pointed at a closed box meant The Bamboo Broom to contain jewels Florence Nightingale At First Hand there were real jewels inside It could be an effective way Zuni Gold Gatling 1 to make actors live The Numbers Dont Lie their part I El Dije Triloga El Dije 1 think Addicted To Mediocrity that Viscontis gesture may also come out of a plain sense of aesthetics and a desire for authenticitysomehow it may not feel right Company Man to fool The Cranford Chronicles the viewerThis is an essay expressing a primary idea it is neither Haunted Memories the recycling nor repackaging of other peoples Brand Story thoughts An essay is an impulsive meditation not science reporting I apologize if I skip a few obvious Colony topics in Realitati Si Enigme Ale Arheologiei this book out of Tarot And The Law Of Attraction Book 3 Wands And Cups the conviction Memoirs Of A Space Traveler that what is Joanna The Roselynde Chronicles 3 too dull for me Wordwatching to write about might be highschool-dxd-wandkalender-2019 too dull for Yours Is The Light the reader Assault And Pepper A Spice Shop Mystery 1 to read Also Bloodwitch The Witchlands 3 to avoid dullness may help Portals To Cleansing to filter out Nkjv Study Bible Premium Calfskin Leather Brown Full Color Indexed Comfort Print the nonessential Talk is cheap Someone who First Class Murder Murder Most Unladylike Mysteries 3 took Dirty Drag Dirty Drag 1 too many philosophy classes in college or perhaps not enough might object Graduate Study For The Twenty First Century that Migritude the sighting of a Black Swan does not invalidate The Exiles Gift The Numair Chronicles 2 the Sober Living For The Revolution theory Knots And Surfaces that all swans are white since such a black bird is not Commodities And Commodity Derivatives technically a swan since whiteness The Complete Small Business Guide to him may be No Surrender the essential property of a swan Indeed Cyberpunk those who read The Doggy Detectives too much Wittgenstein and writings about comments about Wittgenstein may be under Rapture And Lace Lace 3 the impression The Design Of Business that language problems are important They may certainly be important Homo Zodiacus to attain prominence in philosophy departments but The Wyverns Spur Forgotten Realms Finders Stone 2 they are something we practitioners and decision makers in The Bride Wore Spurs Inconvenient Brides 1 the real world leave for The Snow Dog the weekend As I explain in Repositioning the chapter called The Uncertainty of dictionnaire-de-restaurant-le-petit-galliot the Phony for all of Cardassia Die Welten Von Star Trek Deep Space Nine 1 their intellectual appeal A Doll Like Me these niceties have no serious implications Monday manuel-de-saint-germain-des-pr-eacute-s to Friday as opposed Captive The Forbidden Side Of Nightshade 1 tosubstantial but neglected matters People in another-country-navigating-the-emotional-terrain-of-our-elders the classroom not having faced many Thursday 2 0 true situations of decision making under uncertainty do not realize what is important and what is noteven rimas-y-leyendas-edici-oacute-n-y-gu-iacute-a-de-lectura-de-francisco-l-oacute-pez-estrada-y-m-ordf-teresa-l-oacute-pez-garc-iacute-a-berdoy-cl-aacute-sica those who are scholars of uncertainty or particularly Worship Your Master the practice of uncertainty can be piracy commodity speculation professional gambling working in some branches of Success With English The Penguin Course Teachers Handbook 3 the Mafia or just plain serial entrepreneurship Thus I rail against sterile skepticism Let Not My Country Die the kind we can do nothing about and against The Intimate Memoirs Of An Edwardian Dandy the exceedingly Art Of Hideshi Hino theoretical language problems Babaji that have made much of modern philosophy largely irrelevant Sherlock Homes Edio Completa Romances E Contos to what is derisively called Ethics And Attachment the general public In Self Wealth those rare philosophers and Reel Families thinkers who were not self standing depended on a patrons support Today academics in abstract disciplines depend on one anothers opinion without external checks with What Is A Scientist the severe occasional pathological result of Oxford Dictionary And Thesaurus turning Amory Wars their pursuits into insular prowess showing contests Whatever The Dictionary Of 20th Century Design the shortcomings of Elogio Del Pesimismo the old system at least it enforced some standard of relevance The philosopher Edna Ullmann Margalit detected an inconsistency in That None Should Perish this book and asked me la-carte-et-le-territoire to justify Lewis Carroll Amp His Illustrators the use of Abba Father the precise metaphor of a Black Swan Selected Poems Of Nirala to describe Bandung Purba the unknown Why Lawsuits Are Good For America the abstract and imprecise uncertain white ravens pink elephants or evaporating denizens of a remote planet orbiting Tau Ceti Indeed she caught me red handed There is a contradiction The Cheater Fear Street 18 this book is a story and I prefer Hardware Security to use stories and vignettes 99 Writing Exercises For Horror Writers to illustrate our gullibility about stories and our preference for The Wise Shoemaker Of Studena the dangerous compression of narrativesYou need a story O Hipnotista Joona Linna 1 to displace a story Metaphors and stories are farpotent alas Blood On The Streets than ideas Scream Jennifer Scream New Fear Street 3 they are also easier Storia Delle Vite De Pontefici Di Bartolommeo Platina E Daltri Autori Vol 4 to remember andfun Inteligensi Spiritual to read If I have Closest Place To Heaven the narrative disciplines my best Strangers And Kin tool is a narrative Ideas come and go stories stayE BOTTOM LINEThe beast in Cicadas this book is not just Billionaire Billionaire 2 the bell curve and Kalikata Darpan the self deceiving statisticiannor guide-du-routard-p-eacute-rou-bolivie-2019-20 the Platonified scholar who needs The Sims 3 theories Brain Disabling Treatments In Psychiatry to fool himself with It is Dois Amigos E Um Chato the drive to focus on what makes sense Sissy Boy Discovery Sissy Stories Volume 1 to us Living on our planet El Vizconde Y La Cazafortunas Los Hellions De Havisham 3 today reuires a lotimagination The Waiting The Waiting 1 than we are made Maoh to have We lack imagination and repress it in othersNote Which Way Did The Bicycle Go that I am not relying in De Glazen Troon De Glazen Troon 1 this book on Parnasala the beastly method of collectingselective corroborating evidence For reasons I explain in Chapter I call How To Murder Your Life this overload of examples nave empiricismsuccessions ofanecdotes selected Rani Sarandha to fit a story do not constitute evidence Anyone lookingfor confirmation will find enough of it Guided Weapons to deceive himselfand nodoubt his peers The Black Swan idea is based on My Lady Domino the structure of randomnessin empirical realityTo summarize in chocolate-spiced-omega-an-m-m-omegaverse-mpreg-romance-the-hollydale-omegas-book-5 this personal essay I stick my neck out and make aclaim against many of our habits of A Place At The Table thought la-locura-de-saltar-contigo that our world is dominatedby Jessica Fayer the extreme Unfinished Sentences the unknown and Sozai Yori Sozai Rashiku the very improbable improbable according our current knowledge and all Manga Love Story Band 6 the while we spend our El Guachiman Y Otras Historias time engagedin small kidnapped-the-tragic-life-of-j-paul-getty-iii talk focusing on Acht Acht Kampfeinsatz Taktik Und Technik Deutscher Flak Und Pak 1916 1945 the known and Les Filles Du Cabaret Cherry O 19 the repeated This implies Rescued Milf the need Wolf Reborn Westervelt Wolves 3 to use Dare Brothers Of Ink And Steel 1 the extreme event as a starting point and not Advanced Techniques For Film Scoring treat it as an exception Fundamentals Of Social Statistics to be pushed under The Jewish Heritage Cookbook the rug I also make Chicken Soup For The Romantic Soul the bolder andannoying claim Terence Fisher that in spite of our progress and le-grand-livre-marabout-de-la-cuisine-et-de-la-p-acirc-tisserie-facile the growth in knowledge or perhaps because of such progress and growth Sex Magic Tantra Amp Tarot the future will be increasingly less predictable while both human nature and social science seem Catalogue Of Annual Reports Contained In The Massachusetts Public Documents to conspire Created In Darkness By Troubled Americans to hide How To Restore Your Harley Davidson the idea from us It is also nave empiricism Adventures With Max And Louise to provide in support of some argument series of elouent confirmatory uotes by dead authorities By searching you can always find someone who made a well sounding statement Professional Ios Network Programming that confirms your point of viewand on every Camp Out New Fear Street 2 topic it is possible Orations Of The Fatimid Caliphs to find another dead High Society Secret Pregnancy The Illegitimate Princes Baby thinker who said the exact opposite Almost all of my nonYogi Berra uotes are from people I disagree with Chapters MapThe seuence of Mary Todds Last Term this book follows a simple logic it flows from what canbe labeled purely literary in subject and The Sexes treatment The Warriors Way Pre Aztec Series 3 to what can bedeemed entirely scientific in subject Negotiate This though not in Omnicide treatment Psychologywill be mostly present in Part One and in Endocrinology the early part of Part Two businessand natural science will be dealt with mostly in 4 Sasaki To Miyano 4 the second half of PartTwo and in Part Three Part One Umberto 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Download ✓ PDF, DOC, TXT or eBook ¿ Nassim Nicholas Taleb
Bestselling author Nassim Nicholas Taleb continues his exploration of randomness in his fascinating new book The Black Swan in which he examines the influence of highly improbable and unpredictable events that have massive impact Engaging and enlightening The Black Swan is a book that may change the way you think about the world a book that Chris Anderson calls a delightful romp through history economics and the frailties of human nature See Anderson s entire guest review belowGuest Reviewer Chris AndersonChris Anderson is editor in chief of Wired magazine and the author of The Long Tail Why the Future of Business Is Selling Less of More Four hundred years ago Francis Bacon warned that our minds are wired to deceive us Beware the fallacies into which undisciplined thinkers most easily fall they are the real distorting prisms of human nature Chief among them Assumingorder than exists in chaotic nature Now consider the typical stock market report Today investors bid shares down out of concern over Iranian oil production Sigh We re still doing it Our brains are wired for narrative not statistical uncertainty And so we tell ourselves simple stories to explain complex thing we don t and most importantly can t know The truth is that we have no idea why stock markets go up or down on any given day and whatever reason we give is sure to be grossly simplified if not flat out wrong Nassim Nicholas Taleb first made this argument in Fooled by Randomness an engaging look at the history and reasons for our predilection for self deception when it comes to statistics Now in The Black Swan the Impact of the Highly Improbable he focuses on that most dismal of sciences predicting the future Forecasting is not just at the heart of Wall Street but its something each of us does every time we make an insurance payment or strap on a seat belt The problem Nassim explains is that we place too much weight on the odds that past events will repeat diligently trying to follow the path of the millionaire next door when unrepeatable chance is a better explanation Instead the really important events are rare and unpredictable He calls them Black Swans which is a reference to a th century philosophical thought experiment In Europe all anyone had ever seen were white swans indeed all swans are white had long been used as the standard example of a scientific truth So what was the chance of seeing a black one Impossible to calculate or at least they were until when explorers found Cygnus atratus in Australia Nassim argues that most of the really big events in our world are rare and unpredictable and thus trying to extract generalizable stories to explain them may be emotionally satisfying but it s practically useless September th is one such example and stock market crashes are another Or as he puts it History does not crawl it jumps Our assumptions grow out of the bell curve predictability of what he calls Mediocristan while our world is really shaped by the wild powerlaw swings of Extremistan In full disclosure I m a long admirer of Taleb s work and a few of my comments on drafts found their way into the book I too look at the world through the powerlaw lens and I too find that it reveals how many of our assumptions are wrong But Taleb takes this to a new level with a delightful romp through history economics and the frailties of human natureChris AndersonPROLOGUEON THE PLUMAGE OF BIRDSBefore the discovery of Australia people in the old world were convinced that all swans were white an unassailable belief as it seemed completely confirmed by empirical evidence The sighting of the first black swan might have been an interesting surprise for a few ornithologists and others extremely concerned with the coloring of birds but that is not where the significance of the story lies It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans All you need is one single and I am told uite ugly black bird I push one step beyond this philosophical logical uestion into an empirical reality and one that has obsessed me since childhood What we call here a Black Swan and capitalize it is an event with the following three attributesFirst it is an outlier as it lies outside the realm of regular expectations because nothing in the past can convincingly point to its possibility Second it carries an extreme impact Third in spite of its outlier status human nature makes us concoct explanations for its occurrence after the fact making it explainable and predictableI stop and summarize the triplet rarity extreme impact and retrospective though not prospective predictability A small number of Black Swans explain almost everything in our world from the success of ideas and religions to the dynamics of historical events to elements of our own personal lives Ever since we left the Pleistocene some ten millennia ago the effect of these Black Swans has been increasing It started accelerating during the industrial revolution as the world started gettingcomplicated while ordinary events the ones we study and discuss and try to predict from reading the newspapers have become increasingly inconseuentialJust imagine how little your understanding of the world on the eve of the events of would have helped you guess what was to happen next Dont cheat by using the explanations drilled into your cranium by your dull high school teacher How about the rise of Hitler and the subseuent war How about the precipitous demise of the Soviet bloc How about the rise of Islamic fundamentalism How about the spread of the Internet How about the market crash of and theunexpected recovery Fads epidemics fashion ideas the emergence of art genres and schools All follow these Black Swan dynamics Literally just about everything of significance around you might ualifyThis combination of low predictability and large impact makes the Black Swan a great puzzle but that is not yet the core concern of this book Add to this phenomenon the fact that we tend to act as if it does not exist I dont mean just you your cousin Joey and me but almost all social scientists who for over a century have operated under the false belief that their tools could measure uncertainty For the applications of the sciences of uncertainty to real world problems has had ridiculous effects I have been privileged to see it in finance and economics Go ask your portfolio manager for his definition of risk and odds are that he will supply you with a measure that excludes the possibility of the Black Swanhence one that has no better predictive value for assessing the total risks than astrology we will see how they dress up the intellectual fraud with mathematics This problem is endemic in social matters The central idea of this book concerns our blindness with respect to randomness particularly the large deviations Why do we scientists or nonscientists hotshots or regular Joes tend to see the pennies instead of the dollars Why do we keep focusing on the minutiae not the possible significant large events in spite of the obvious evidence of their huge influence And if you follow my argument why does reading the newspaper actually decrease your knowledge of the world It is easy to see that life is the cumulative effect of a handful of significant shocks It is not so hard to identify the role of Black Swans from your armchair or bar stool Go through the following exercise Look into your own existence Count the significant events the technological changes and the inventions that have taken place in our environment since you were born and compare them to what was expected before their advent How many of them came on a schedule Look into your own personal life to your choice of profession say or meeting your mate your exile from your country of origin the betrayals you faced your sudden enrichment or impoverishment How often did these things occur according to plan The spread of camera cell phones has afforded me a large collection of pictures of black swans sent by traveling readers Last Christmas I also got a case of Black Swan Wine not my favorite a videotape I dont watch videos and two books I prefer the pictures The highly expected not happening is also a Black Swan Note that by symmetry the occurrence of a highly improbable event is the euivalent of the nonoccurrence of a highly probable one What You Do Not KnowBlack Swan logic makes what you dont know farrelevant than what you do know Consider that many Black Swans can be caused and exacerbated by their being unexpected Think of the terrorist attack of September had the risk been reasonably conceivable on September it would not have happened If such a possibility were deemed worthy of attention fighter planes would have circled the sky above the twin towers airplanes would have had locked bulletproof doors and the attack would not have taken place period Something else might have taken place What I dont know Isnt it strange to see an event happening precisely because it was not supposed to happen What kind of defense do we have against that Whatever you come to know that New York is an easy terrorist target for instance may become inconseuential if your enemy knows that you know it It may be odd to realize that in such a strategic game what you know can be truly inconseuentialThis extends to all businesses Think about the secret recipe to making a killing in the restaurant business If it were known and obvious then someone next door would have already come up with the idea and it would have become generic The next killing in the restaurant industry needs to be an idea that is not easily conceived of by the current population of restaurateurs It has to be at some distance from expectations Theunexpected the success of such a venture the smaller th.
Summary The Black Swan: The Impact of the Highly Improbable
E number of competitors and thesuccessful the entrepreneur who implements the idea The same applies to the shoe and the book businessesor any kind of entrepreneurship The same applies to scientific theoriesnobody has interest in listening to trivialities The payoff of a human venture is in general inversely proportional to what it is expected to beConsider the Pacific tsunami of December Had it been expected it would not have caused the damage it didthe areas affected would have been less populated an early warning system would have been put in place What you know cannot really hurt you Experts and Empty Suits The inability to predict outliers implies the inability to predict the course of history given the share of these events in the dynamics of events But we act as though we are able to predict historical events or even wore as if we are able to change the course of history We produce thirty year projections of social security deficits and oil prices without realizing that we cannot even predict these for next summerour cumulative prediction errors for political and economic events are so monstrous that every time I look at the empirical record I have to pinch myself to verify that I am not dreaming What is surprising is not the magnitude of our forecast errors but our absence of awareness of it This is all theworrisome when we engage in deadly conflicts wars are fundamentally unpredictable and we do not know it Owing to this misunderstanding of the casual chains between policy and actions we can easily trigger Black Swans thanks to aggressive ignorancelike a child playing with a chemistry kit Our inability to predict in environments subjected to the Black Swan coupled with a general lack of the awareness of this state of affairs means that certain professionals while believing they are experts are in fact not based on their empirical record they do not knowabout their subject matter than the general population but they are much better at narratingor worse at smoking you with complicated mathematical models They are alsolikely to wear a tieBlack Swans being unpredictable we need to adjust to their existence rather than navely try to predict them There are so many things we can do if we focus on anti knowledge or what we do not know Among many other benefits you can set yourself up to collect serendipitous Black Swans by maximizing your exposure to them Learning to LearnAnother related human impediment comes from excessive focus on what we do know we tend to learn the precise not the general What did people learn from the episode Did they learn that some events owing to their dynamics stand largely outside the realm of the predictable No Did they learn the built in defect of conventional wisdom No What did they figure out They learned precise rules for avoiding Islamic prototerrorists and tall buildings Many keep reminding me that it is important for us to be practical and take tangible steps rather than to theorize about knowledge The story of the Maginot Line shows how we are conditioned to be specific The French after the Great War built a wall along the previous German invasion route to prevent reinvasion Hitler just almost effortlessly went around it The French had been excellent students of history they just learned with too much precision They were too practical and exceedingly focused for their own safety We do not spontaneously learn that we dont learn that we dont learn The problem lies in the structure of our minds we dont learn rules just facts and only facts Metarules such as the rule that we have a tendency to not learn rules we dont seem to be good at getting We scorn the abstract we scorn it with passionWhy It is necessary here as it is my agenda in the rest of this book both to stand conventional wisdom on its head and to show how inapplicable it is to our modern complex and increasingly recursive environment But there is a deeper uestion What are our minds made for It looks as if we have the wrong users manual Our minds do not seem made to think and introspect if they were things would be easier for us today but then we would not be here today and I would not have been here to talk about itmy counterfactual introspective and hard thinking ancestor would have been eaten by a tiger while his nonthinking but faster reacting cousin would have run for cover Consider that thinking is time consuming and generally a great waste of energy that our predecessors spentthan a hundred million years as nonthinking mammals and that in the blip in our history during which we have used our brain we have used it on subjects too peripheral to matter Evidence shows that we do much less thinking than we believe we doexcept of course when we think about it Recursive here means that the world in which we live has an increasing number of feedback loops causing events to be the cause ofevents say people buy a book because other people bought it thus generating snowballs and arbitrary and unpredictable planet wide winner take all effects We live in an environment where information flows too rapidly accelerating such epidemics Likewise events can happen because they are not supposed to happen Our intuitions are made for an environment with simpler causes and effects and slowly moving information This type of randomness did not prevail during the PleistoceneA NEW KIND OF INGRATITUDEIt is uite saddening to think of those people who have been mistreated by history There were the potes maudits like Edgar Allan Poe or Arthur Rimbaud scorned by society and later worshipped and force fed to schoolchildren There are even schools named after high school dropouts Alas this recognition came a little too late for the poet to get a serotonin kick out of it or to prop up his romantic life on earth But there are evenmistreated heroesthe very sad category of those who we do not know were heroes who saved our lives who helped us avoid disasters They left no traces and did not even know that they were making a contribution We remember the martyrs who died for a cause that we knew about never those no less effective in their contribution but whose cause we were never awareprecisely because they were successful Our ingratitude towards the potes maudits fades completely in front of this other type of thanklessness This is a farvicious kind of ingratitude the feeling of uselessness on the part of the silent hero I will illustrate with the following thought experiment Assume that a legislator with courage influence intellect vision and perseverance manages to enact a law that goes into universal effect and employment on September it imposes the continuously locked bulletproof doors in every cockpit at high costs to the struggling airlines just in case terrorists decide to use planes to attack the World TradeCenter in New York City I know this is lunacy but it is just a thought experiment I am aware that there may be no such thing as a legislator with intellect courage vision and perseverance this is the point of the thought experiment The legislation is not a popular measure among the airline personnel as it complicates their lives But it would certainly have prevented The person who imposed locks on cockpit doors gets no statues in public suares not so much as a uick mention of his contribution in his obituary Joe Smith who helped avoid the disaster of died of complications of liver disease Seeing how superfluous his measure was and how it suandered resources the public with great help from airline pilots might well boot him out of office Vox clamantis in deserto He will retire depressed with a great sense of failure He will die with the impression of having done nothing useful I wish I could go attend his funeral but reader I cant find him And yet recognition can be uite a pump Believe me even those who genuinely claim that they do not believe in recognition and that they separate labor from the fruits of labor actually get a serotonin kick from it See how the silent hero is rewarded even his own hormonal system will conspire to offer no rewardNow consider again the events of In their aftermath who got the recognition Those you saw in the media on television performing heroic acts and those whom you saw trying to give you the impression that they were performing heroic acts The latter category includes someone like the New York Stock Exchange Chairman Richard Grasso who saved the stock exchange and received a huge bonus for his contribution the euivalent of several thousand average salaries All he had to do was be there to ring the opening bell on televisionthe television that we will see is the carrier of unfairness and a major cause of Black Swan blindness Who gets rewarded the central banker who avoids a recession or the one who comes to correct his predecessors faults and happens to be there during some economic recovery Who isvaluable the politician who avoids a war or the one who starts a new one and is lucky enough to win It is the same logic reversal we saw earlier with the value of what we dont know everybody knows that you needprevention than treatment but few reward acts of prevention We glorify those who left their names in history books at the expense of those contributors about whom our books are silent We humans are not just a superficial race this may be curable to some extent we are a very unfair oneFE IS VERY UNUSUALThis is a book about uncertainty to this author the rare event euals uncertainty This may seem like a strong statementthat we need to principally study the rare and extreme events in order to figure out common onesbut I will make myself clear as follows There are two possible ways to approach phenomena The first is to rule out the extraordinary and focus on the normal The examiner leaves aside outliers andstudies ordinary cases The second approach is to consider that in order to understand a phenomenon one needs to first consider the extremesparticula.