Improbable

Nassim Nicholas Taleb

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Contents
Articles
Nassim Nicholas Taleb The Black Swan (2007 book) Black swan theory Ludic fallacy Fooled by Randomness 1 12 17 20 22

References
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Nassim Nicholas Taleb

Nassim Nicholas Taleb

Nassim Nicholas Taleb

Born

1960 (age5253) Amioun, Lebanon United States, United Kingdom, Lebanon Lebanese, American Lebanese randomness, probability and uncertainty [1]

Residence Citizenship Nationality Fields Institutions

Polytechnic Institute of New York University (current), Oxford University (current), University of Massachusetts Amherst, Courant Institute of Mathematical Sciences University of Paris (B.S & M.S) Wharton School (M.B.A.) University of Paris (Dauphine) (Ph.D.) Hlyette Geman Applied epistemology Friedrich Hayek, Karl Popper, Henri Poincar, Michel de Montaigne, Benoit Mandelbrot, Frdric Bastiat

Alma mater

Doctoral advisor Knownfor Influences

Nassim Nicholas Taleb (Arabic: , alternatively Nessim or Nissim, born 1960) is a Lebanese American essayist, scholar and statistician, whose work focuses on problems of randomness, probability and uncertainty.[2] His 2007 book The Black Swan was described in a review by the Sunday Times as one of the twelve most influential books since World War II.[3] Taleb is a bestselling author,[4][5] and has been a professor at several universities, currently at Polytechnic Institute of New York University and Oxford University.[6] He has also been a practitioner of mathematical finance,[7] a hedge fund manager,[8][9][10] a derivatives trader,[11][12] and is currently a scientific adviser at Universa Investments and the International Monetary Fund.[13] He criticized the risk management methods used by the finance industry and warned about financial crises, subsequently profiting from the late-2000s financial crisis. He advocates what he calls a "black swan robust" society, meaning a society that can withstand difficult-to-predict events. He proposes "antifragility" in systems, that is, an ability to benefit and grow from a certain class of random events, errors, and volatility[14][15] as well as "convex tinkering" as a method of scientific discovery, by which he means option-like experimentation outperforms directed research.[16]

Nassim Nicholas Taleb

Family background and education

Taleb was born in Amioun, Lebanon to Minerva Ghosn and Najib Taleb, a physician and an oncologist and a researcher in anthropology. His parents were Greek Orthodox Lebanese with French citizenship, and he attended a French school there, the Grand Lyce Franco-Libanais.[17] His family saw its political prominence and wealth reduced by the Lebanese Civil War, which began in 1975. During the war, Taleb studied for several years in the basement of his family's home.[18] Both sides of his family were politically prominent in the Lebanese Greek Orthodox community. On his mother's side, his grandfather, Fouad Nicolas Ghosn, and his great-grandfather, Nicolas Ghosn, were both deputy prime ministers. His paternal grandfather was a supreme court judge; his great-great-great-great grandfather, Ibrahim Taleb, was a governor of the Ottoman semi-autonomous Mount Lebanon Governorate in 1861.[19] Taleb has described himself as Greek Orthodox. The Taleb family Palazo, built in 1860 by Florentine architects for his great-great-great-great grandfather, still stands in Amioun.[20]

Taleb in his student days

Taleb received his bachelor and master in science degrees from the University of Paris. He holds an MBA from the Wharton School at the University of Pennsylvania and a PhD in Management Science (his thesis was on the mathematics of derivatives pricing) from the University of Paris (Dauphine) under the direction of Hlyette Geman. A polyglot, Taleb has a literary fluency in English, French, and classical Arabic; a conversational fluency in Italian and Spanish; and can read classical texts in Greek, Latin, Aramaic, and ancient Hebrew, as well as the Canaanite script.[21]

Finance career
Taleb considers himself less a businessman than an epistemologist of randomness, and says that he used trading to attain independence and freedom from authority. As a hedge fund manager, his business model has been to safeguard investors against crises while reaping rewards from rare events, and thus his investment management career has included several jackpots followed by lengthy dry spells. Taleb was a pioneer of tail risk hedging (now sometimes called "black swan protection"), whereby investors are insured against extreme market moves. He has held the following positions: managing director and proprietary trader at Credit SuisseUBS; worldwide chief proprietary arbitrage derivatives trader for currencies, commodities and non-dollar fixed income at First Boston; chief currency derivatives trader for Banque Indosuez(now Calyon); managing director and worldwide head of financial option arbitrage at CIBC Wood Gundy; derivatives arbitrage trader at Bankers Trust (now Deutsche Bank), proprietary trader at BNP Paribas, as well as independent option market maker on the Chicago Mercantile Exchange; and founder of Empirica Capital, after which Taleb retired from trading and became a full-time author and author in 2004. Taleb is currently Principal/Senior Scientific Adviser at Universa Investments in Santa Monica, California, a tail protection firm owned and managed by former Empirica partner Mark Spitznagel. Taleb reportedly became financially independent after the crash of 1987 and was successful during the financial crisis that began in 2007[citation needed], a development which he attributed to the mismatch between statistical distributions used in finance and reality. Universa is a fund which is based on the "black swan" idea and to which Taleb is a principal adviser. Some of the separate funds managed by Universa made returns of 65% to 115% in October 2008. Following the economic crisis that started in 2008, Taleb has become an activist for what he called a "black swan robust society" and as of July 2011, Taleb is working with the International Monetary Fund on identifying and mitigating tail risks in financial markets.

Nassim Nicholas Taleb

Academic career
Taleb became a full-time scholar and essayist in 2006 as a university professor.[22] He is currently Distinguished Professor of Risk Engineering at Polytechnic Institute of New York University,[23] and Distinguished Research Scholar, Said Business School, Oxford University. He was Visiting Professor at London Business School and the Dean's Professor in the Sciences of Uncertainty at the Isenberg School of Management at the University of Massachusetts Amherst, Adjunct Professor of Mathematics at the Courant Institute of New York University, and affiliated faculty member at the Wharton Business School Financial Institutions Center. He jointly teaches regular courses with Paul Wilmott and occasionally on the Certificate in Quantitative Finance. In May 2012, he ranked fourth in terms of the number of downloaded papers on the Social Science Research Network (SSRN).[24]

Writing career
Taleb's first non-technical book, Fooled by Randomness, about the underestimation of the role of randomness in life, around the same time as the September 11 attacks, was selected by Fortune as one of the smartest 75 books known. His second non-technical book, The Black Swan, about unpredictable events, was published in 2007, selling close to 3 million copies (as of February 2011). It spent 36 weeks on the New York Times Bestseller list,[25] 17 as hardcover and 19 weeks as paperback, and was translated into 31 languages. The Black Swan has been credited with predicting the banking and economic crisis of 2008. Taleb's non-technical writing style mixes a narrative style (often semi-autobiographical) and short philosophical tales together with historical and scientific commentary. The sales of Taleb's first two books garnered an advance of $4 million for a follow-up book on anti-fragility. A technical companion for the Incerto Trilogy is freely available on Taleb's website.[26] A book of aphorisms, The Bed of Procrustes: Philosophical and Practical Aphorisms, was released in December 2010. The final book of his Incerto series Antifragile: Things That Gain from Disorder was published in November 2012 by Random House in the United States and Penguin[27] in the United Kingdom. In the introduction of the book, Taleb describes it as follows: "Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better."[28] In 2007, in The Black Swan, Taleb warned about the coming crisis: Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur .... I shiver at the thought. The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deem these events "unlikely". He warned of pseudostability in Syria:[29]

Nassim Nicholas Taleb Dictatorships that do not appear volatile, like, say, Syria or Saudi Arabia, face a larger risk of chaos than, say, Italy, as the latter has been in a state of continual political turmoil since the second war.

Philosophical theories
His book The Bed of Procrustes summarizes the central problem: "we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas". Taleb disagrees with Platonic (i.e., theoretical) approaches to reality to the extent that they lead people to have the wrong map of reality rather than no map at all. He opposes most economic and grand social science theorizing, which in his view suffer acutely from the problem of overuse of Plato's Theory of Forms. Relatedly, he also believes that universities are better at public relations and claiming credit than generating knowledge. He argues that knowledge and technology are usually generated by what he calls "stochastic tinkering" rather than by top-down directed research.[30][31] He calls for cancellation of the Nobel Memorial Prize in Economics, saying that the damage from economic theories can be devastating.[32] He opposes top-down knowledge as an academic illusion and believes that price formation obeys an organic process.[33] Together with Espen Gaarder Haug, Taleb asserts that option pricing is determined in a "heuristic way" by operators, not by a model, and that models are "lecturing birds on how to fly". Pablo Triana has explored this topic with reference to Haug and Taleb,[34][35] and says that perhaps Taleb is correct to urge that banks be treated as utilities forbidden to take potentially lethal risks, while hedge funds and other unregulated entities should be able to do what they want.[36] Taleb's writings discuss the error of comparing real-world randomness with the "structured randomness" in quantum physics where probabilities are remarkably computable and games of chance like casinos where probabilities are artificially built.[37] Taleb calls this the "Ludic fallacy". His argument centers on the idea that predictive models are based on Plato's Theory of Forms, gravitating towards mathematical purity and failing to take some key ideas into account, such as: the impossibility of possessing all relevant information, that small unknown variations in the data can have a huge impact, and flawed theories/models that are based on empirical data and that fail to consider events that have not taken place but could have taken place. Discussing the Ludic fallacy in The Black Swan, he writes, "The dark side of the moon is harder to see; beaming light on it costs energy. In the same way, beaming light on the unseen is costly in both computational and mental effort." In the second edition of The Black Swan, he posited that the foundations of quantitative economics are faulty and highly self-referential. He states that statistics is fundamentally incomplete as a field as it cannot predict the risk of rare events, a problem that is acute in proportion to the rarity of these events. With the mathematician Raphael Douady, he called the problem statistical undecidability (Douady and Taleb, 2010). Taleb sees his main challenge as mapping his ideas of "robustification" and "anti-fragility", that is, how to live and act in a world we do not understand and build robustness to black swan events. Taleb introduced the idea of the "fourth quadrant". One of its applications is in his definition of the most effective (that is, least fragile) risk management approach: what he calls the 'barbell' strategy which is based on avoiding the middle in favor of linear combination of extremes, across all domains from politics to economics to one's personal life. These are deemed more robust to estimation errors. For instance, he suggests that investing money in 'medium risk' investments is pointless because risk is difficult if not impossible to compute. His preferred strategy is to be both hyper-conservative and hyper-aggressive at the same time. For example, an investor might put 80 to 90% of their money in extremely safe instruments, such as treasury bills, with the remainder going into highly risky and diversified speculative bets. An alternative suggestion is to engage in highly speculative bets that are insured against losses of more than a specified amount. He asserts that by adopting these strategies a portfolio can be "robust", that is, gain a positive exposure to black swan events while limiting losses suffered by such random events.[38] Taleb also applies a similar barbell-style approach to health and exercise. Instead of doing steady and moderate exercise daily, he suggests that it is better to do a low-effort exercise such as walking slowly most of the time, while occasionally

Nassim Nicholas Taleb expending extreme effort. He avers that the human body evolved to live in a random environment, with various unexpected but intense efforts and much rest.[39] Taleb stays in touch using his simple official Facebook page, but reminds readers not to write in it about finance and (sic.) "similarly depraved topics"

Praise and criticism

In a 2008 article in The Times, the journalist Bryan Appleyard described Taleb as "now the hottest thinker in the world". The Nobel Laureate Daniel Kahneman proposed the inclusion of Taleb's name among the world's top intellectuals, saying "Taleb has changed the way many people think about uncertainty, particularly in the financial markets. His book, The Black Swan, is an original and audacious analysis of the ways in which humans try to make sense of unexpected events." Taleb was treated as a "rock star" at the World Economic Forum annual meeting in Davos in 2009; at that event he had harsh words for bankers.Wikipedia:Please clarify Taleb contends that statisticians can be pseudoscientists when it comes to risks of rare events and risks of blowups, and mask their incompetence with complicated equations. Simply, one observation in 10,000, that is, one day in 40 years, can explain the bulk of the "kurtosis", a measure of what we call "fat tails", that is, how much the distribution under consideration departs from the standard Gaussian, or the role of remote events in determining the total properties. For the U.S. stock market, a single day, the crash of 1987, determined 80% of the kurtosis. The same problem is found with interest and exchange rates, commodities, and other variables. The problem is not just that the data had "fat tails", something people knew but sort of wanted to forget; it was that we would never be able to determine "how fat" the tails were. Never. The implication is that those tools used in economics that are based on squaring variables (more technically, the Euclidian, or L-2 norm), such as standard deviation, variance, correlation, regression, or value-at-risk, the kind of stuff you find in textbooks, are not valid scientifically (except in some rare cases where the variable is bounded). The so-called "p values" you find in studies have no meaning with economic and financial variables. Even the more sophisticated techniques of stochastic calculus used in mathematical finance do not work in economics except in selected pockets.[40] This stance has attracted criticism: the American Statistical Association devoted the August 2007 issue of The American Statistician to The Black Swan. The magazine offered a mixture of praise and criticism for Taleb's main points, with a focus on Taleb's writing style and his representation of the statistical literature. Robert Lund, a mathematics professor at Clemson University, writes that in Black Swan, Taleb is "reckless at times and subject to grandiose overstatements; the professional statistician will find the book ubiquitously naive."[41] Aaron Brown, an author, quant and finance professor at Yeshiva and Fordham Universities, said that "the book reads as if Taleb has never heard of nonparametric methods, data analysis, visualization tools or robust estimation."[42] Nonetheless, he calls the book "essential reading" and urges statisticians to overlook the insults to get the "important philosophic and mathematical truths." Taleb replied in the second edition of The Black Swan that "One of the most common (but useless) comments I hear is that some solutions can come from 'robust statistics.' I wonder how using these techniques can create information where there is none".[43] While praising the book, Westfall and Hilbe in 2007 complained that Taleb's criticism is "often unfounded and sometimes outrageous."[44] Taleb, writes John Kay, "describes writers and professionals as knaves or fools, mostly fools. His writing is full of irrelevances, asides and colloquialisms, reading like the conversation of a raconteur rather than a tightly argued thesis. But it is hugely enjoyable compelling but easy to dip into. Yet beneath his rage and mockery are serious issues. The risk management models in use today exclude the very events against which they claim to protect the businesses that employ them. These models import a veneer of technical sophistication... Quantitative analysts have lulled corporate executives and regulators into an illusory sense of security."[45] Taleb felt that academics showed "bad faith" by criticizing a literary book that claimed to be a literary book and by ignoring the empirical evidence provided in his appendix and more technical works.

Nassim Nicholas Taleb The late Berkeley statistician David Freedman said that efforts by statisticians to refute Taleb's stance have been unconvincing.[46] Taleb wrote in the second edition of The Black Swan that he had a session in 2008 with statisticians in which the hostility changed: I found out that telling researchers "This is where your methods work very well" is vastly better than telling them "This is what you guys dont know." So when I presented to what was until then the most hostile crowd in the world, members of the American Statistical Association, a map of the four quadrants, and told them: your knowledge works beautifully in these three quadrants, but beware of the fourth one, as this is where the Black Swans breed, I received instant approval, support, offers of permanent friendship, refreshments (Diet Coke), invitations to come present at their sessions, even hugs(...) They tried to convince me that statisticians were not responsible for these aberrations, which come from people in the social sciences who apply statistical methods without understanding them. Taleb and Nobel laureate Myron Scholes have traded personal attacks, particularly after Taleb's paper with Espen Haug on why nobody used the Black-Scholes-Merton formula. Taleb said that Scholes was responsible for the financial crises of 2008, and suggested that "this guy should be in a retirement home doing Sudoku. His funds have blown up twice. He shouldn't be allowed in Washington to lecture anyone on risk." Scholes retorted that Taleb simply "popularises ideas and is making money selling books". Scholes claimed that Taleb does not cite previous literature, and for this reason Taleb is not taken seriously in academia.[47] Haug and Taleb (2011) listed hundreds of research documents showing the Black-Scholes formula was not Scholes' at all and argued that the economics establishment ignored the literature by practitioners and mathematicians (such as Ed Thorp), who had developed a more sophisticated version of the formula. Citing his academic works on the same topics covered in The Black Swan, Taleb said that "Academics should comment on data there, not make technical comments on a literary book". He has said that no direct published criticism has been directed at his ideas, but rather at his person and style. He wrote, "you never win an argument until they attack your person." In an interview on Charlie Rose, Taleb said that he was pleased that none of the criticism he received for The Black Swan had any substance, as it was either unintelligent, ad hominem, or style over substance, which convinced him to "go for the jugular" with a huge financial bet on the breakdown of statistical methods in finance. Taleb's aggressive attitude against the finance industry has led to personal attacks, including a smear campaign and death threats from former employees of Lehman Brothers.

Personal life
The Penguin book cover writes that Taleb "refuses all awards and honours as they debase knowledge by turning it into competitive sport". Though a non-smoker, Taleb suffered from throat cancer in the mid-1990s, which he overcame. He has stated that his major hobby is "teasing people who take themselves and the quality of their knowledge too seriously and those who don't have the guts to sometimes say: 'I dont know ...'" Some reporters have commented that information about his personal life is difficult to extract, though Taleb appears to enjoy being in the limelight.[48] Others find him more talkative: Malcolm Gladwell, in What the Dog Saw, wrote: "We would have lunches that would last for hours. The delight I took in his company was offset only by the dread I felt at the prospect of transcribing all those hours of tapes."[49]

Nassim Nicholas Taleb

Bibliography
Literary and nontechnical books
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. New York: Random House and Penguin. 2001/2005. ISBN0-8129-7521-9. Le Hasard Sauvage. Paris: Les Belles Lettres. 2005. ISBN2-251-44297-9. The French edition of Fooled by Randomness with revisions and changes to the English version. The Black Swan: The Impact of the Highly Improbable. New York: Random House and Penguin. 2007/2010. ISBN978-1-4000-6351-2.The book was completed in 2010 with the second edition including a long essay "On Robustness and Fragility". Force et fragilit, reflexions philosophiques et empiriques. Paris: Les Belles Lettres. 2010. The Bed of Procrustes: Philosophical and Practical Aphorisms. New York: Random House. 2010. ISBN978-1-4000-6997-2. Antifragile: Things That Gain from Disorder. New York: Random House. 2012. ISBN978-1-4000-6782-4.

Scholarly and technical publications

Probability and Risk in the Real World, Lecture Notes [50] (2013) Electronic Book: Technical Companion to the Works on Uncertainty" [51] (2012) Dynamic Hedging: Managing Vanilla and Exotic Options. New York: John Wiley & Sons. 1997. ISBN0-471-15280-3. "Bleed or Blowup: What Does Empirical Psychology Tell Us About the Preference For Negative Skewness?", Journal of Behavioral Finance, 5 (2004) These Extreme Exceptions of Commodity Derivatives. in Helyette German, Commodities and Commodity Derivatives. New York: Wiley. (2004) Roots of Unfairness. Literary Research/Recherche littraire. 21(4142): 241254. (2004) On Skewness in Investment Choices. Greenwich Rountable Quarterly 2. (2004) "Fat Tails, Asymmetric Knowledge, and Decision making: Essay in Honor of Benoit Mandelbrot's 80th Birthday." Technical paper series, Willmott (March 2005): 5659. "The Illusion of Dynamic Replication" [52], Quantitative Finance, vol. 5, 4, (2006) with Derman, E.. "Homo Ludens and homo Economicus." Foreword to Aaron Brown's The Poker Face of Wall Street. New York: Wiley. "We Don't Quite Know What We Are Talking About When We Talk About Volatility" [53], Journal of Portfolio Management, (Summer 2007). with Goldstein, D. G. "Black Swan and Domains of Statistics [54]", The American Statistician, (August 2007), Vol. 61, No. 3 "Epistemology and Risk Management" [55], "Risk and Regulation" [56], 13, (Summer 2007) with Pilpel, A. "Infinite Variance and the Problems of Practice" [57], Complexity, 14(2). (2008) Errors, Robustness, and the Fourth Quadrant [58], International Journal of Forecasting "Why We Have Never Used the Black-Scholes-Merton Option Pricing Formula" [59], Wilmott (2008) with Haug, E. G. "The Six Mistakes Executives Make in Risk Management", Harvard Business Review , (October 2009). with Golstein, D. G., and Spitznagel, M., "Too Big to Fail and the Fallacy of Large Institutions" [60] with Tapiero, C. "Decision making and planning under low levels of predictability", International Journal of Forecasting (2009) with Makridakis, S. "Random Jump, not Random Walk". In Francis Diebold and Richard Herring (Eds.), The Known, the Unknown, and the Unknowable, Princeton University Press. with Mandelbrot, B.

Nassim Nicholas Taleb The Prediction of Action, in (eds. T. O' Connor & C. Sandis) A Companion to the Philosophy of Action (Wiley-Blackwell). (2010) with Pilpel, A., "Common Errors in the Interpretation of the Ideas of The Black Swan and Associated Papers" [61],Critical Review, Vol 21, No. 4 (2010) "The Risk Externalities of Too Big to Fail" [62] Physica A (2010) with Tapiero, C. "Option traders use (very) sophisticated heuristics, never the BlackScholesMerton formula", Journal of Economic Behavior and Organizations, 77(2), (February 2011). with Haug, E. G. "Robustness and Model Error inside the Fourth Quadrant" [63], (2010) "Why Did the Crisis of 2008 Happen?" [64], New Political Economy (2011) "Statistical Undecidability" [65], (2011). with Douady, R, "The Black Swan of Cairo" [66],Foreign Affairs, 90, 3 (2012) with Blyth, M. "How to Avoid Another Crisis", SAIS Review of International Affairs with Martin, G. "The Illusion of Thin Tails Under Aggregation (A Reply to Jack Treynor)", Journal of Investment Management (2012) with Martin, G. "A Map and Simple Heuristic to Detect Fragility, Antifragility, and Model Error", Quantitative Finance (2012) "The Future Has Thicker Tails than the Past: Model Error as Branching Counterfactuals", Mandelbrot Memorial (2012) "The Problem is Beyond Psychology: The Real World is More Random than Regression Analyses", International Journal of Forecasting (2012) with Goldstein, D. "A New Heuristic Measure of Fragility and Tail Risks: Application to Stress Testing" (August 2012). IMF No. 12/216. with Canetti, Elie R.D., Kinda, Tidiane, Loukoianova, Elena and Schmieder, Christian,[67]

Essays in literary journals

Le cygne noir de Yevgenia [68] in Delicious Paper (Paris) (2009) Be a gentleman on the treadmill [69] in The Drawbridge (London) (2010)

Other essays
Edge article: "The Opiates of the Middle Class" [70] (2006) "On Forecasting." In John Brockman, ed., "What We Believe But Cannot Prove: Today's Leading Thinkers on Science and the Age of Certainty. (2006) New York: Harper Perennial. Edge article: Real Life is Not a Casino [71], in John Brockman, ed., Edge Question 2008. New York:Harper Perennial. The article explains Taleb's position on global warming and why we need to be green regardless of models. Edge Essay: "The Fourth Quadrant: A Map of the Limits of Statistics" [72] (2008) Edge article: The Idea of Iatrogenic Science [73], in John Brokman, ed., Edge Question 2009. New York: Harper Perennial. Edge article: AntiFragility Or the Property of Disorder Loving Systems [74], in John Brockman, ed., Edge Question 2011. New York: Harper Perennial.

Nassim Nicholas Taleb

Collaborations
Taleb was collaborating with Benoit Mandelbrot on a general theory of risk management. Taleb also works with Daniel Goldstein on a project to test empirically people's intuitions about ecological and high impact uncertainty.

Honors
Inducted into the Derivatives Hall of Fame in February 2001. Selected for the Power 30 in Business by SmartMoney in October 2007. 2007 getAbstract International Book Award. 2008 Frost & Sullivan Visionary of the Year Award. 2008 Prospect Magazine Long list for Public Intellectual of the Year. 2009 Made the Forbes Magazine list of "Most Influential Management Gurus". In 2011, he made the Bloomberg 50 most influential people in global finance.

Quotes
If you see fraud and don't shout fraud, you are a fraud" Read books are far less valuable than unread ones

Notes
[1] Berenson, Alex. " A Year Later, Little Change on Wall St. (http:/ / www. nytimes. com/ 2009/ 09/ 12/ business/ 12change. html?pagewanted=2)", The New York Times (2009-09-11): "Nassim Nicholas Taleb, a statistician, trader, and author, has argued for years that...." [2] http:/ / archive. poly. edu/ press/ _doc/ Nassim_Nicholas_Taleb_joins_Polytechnic. pdf [3] Appleyard, Bryan. " Books that helped to change the world (http:/ / entertainment. timesonline. co. uk/ tol/ arts_and_entertainment/ books/ article6716157. ece)", The Sunday Times (2009-07-19). [4] " Hardcover Business Best Sellers (http:/ / www. nytimes. com/ 2008/ 11/ 02/ books/ bestseller/ besthardbusiness. html?pagewanted=print)", New York Times (2008-11-02). [5] See also [6] " NASSIM NICOLAS TALEB, Author of the National Bestseller, The Black Swan, JOINS POLYTECHNIC INSTITUTE OF NYU (http:/ / archive. poly. edu/ press/ _doc/ Nassim_Nicholas_Taleb_joins_Polytechnic. pdf)", Polytechnic Institute of New York University (2008-10-03) [7] http:/ / www. ft. com/ cms/ s/ 0/ ddd47642-55b7-11e0-a00c-00144feab49a. html#axzz1I1UzeFiM [8] " Brevan Howard Shows Paranoid Survive in Hedge Fund of Time Outs (http:/ / www. bloomberg. com/ apps/ news?sid=aPaQ1qmwpYmw& pid=newsarchive)", Bloomberg News (2009-03-31): "'black swans' difficult-to-predict events that can wipe out a fund. The term was popularized by hedge fund manager and author Nassim Taleb." [9] " He Said It (http:/ / pqasb. pqarchiver. com/ washingtonpost/ access/ 1578644971. html?dids=1578644971:1578644971& FMT=CITE& FMTS=CITE:FT& type=current& date=Oct+ 19,+ 2008& author=Anonymous& pub=The+ Washington+ Post& desc=He+ Said+ It& pqatl=google)", Washington Post (2008-10-18): "Nassim Taleb a former hedge fund manager commenting on the performance of accounts run by Universa Investments where he is an adviser...." [10] " What I read (http:/ / www. usatoday. com/ money/ companies/ management/ 2006-08-06-whatiread_x. htm)", USA Today (2006-08-04): "Taleb, a hedge fund manager, warns of trying to predict behavior by analyzing past successes." [11] The Risk Maverick (http:/ / www. fooledbyrandomness. com/ bloombergProfile. pdf), Stephanie Baker-Said, Bloomberg L.P., May 2008 [12] Dubner, Stephen. " Straight From the Black Swans Mouth (http:/ / freakonomics. blogs. nytimes. com/ 2007/ 05/ 21/ straight-from-the-black-swans-mouth/ )", The New York Times (2007-05-21). [13] Baker, Stephanie. " Talebs Universa Bets on Black Swan Deflation, Hyperinflation (http:/ / www. bloomberg. com/ apps/ news?pid=newsarchive& sid=aDVgqxiT9RSg)", Bloomberg News (2009-06-01). [14] http:/ / www. mdpi. com/ 2073-4425/ 2/ 4/ 998 [15] http:/ / www. project-syndicate. org/ commentary/ the-anti-fragile-life-of-the-economy [16] http:/ / edge. org/ conversation/ understanding-is-a-poor-substitute-for-convexity-antifragility [17] Wighton, David. " Lunch with the FT: Nassim Nicholas Taleb (http:/ / us. ft. com/ ftgateway/ superpage. ft?news_id=fto032820081709226056)", Financial Times (2008-03-28). [18] Helmore, Edward. " The new sage of Wall Street (http:/ / www. guardian. co. uk/ books/ 2008/ sep/ 28/ businessandfinance. philosophy)", The Guardian (2008-09-28).

Nassim Nicholas Taleb

[19] http:/ / www. fooledbyrandomness. com/ talebhistory. pdf [20] " The Taleb Palazzo in Amioun (http:/ / www. fooledbyrandomness. com/ ancestral. htm)", fooledbyrandomness.com (home page of Nassim N. Taleb). Accessed 16 December 2010. [21] "Where Are You Getting Your Probabilities?", June 11, 2008, Book Review by James Case (http:/ / www. siam. org/ news/ news. php?id=1381) [22] http:/ / www. amazon. com/ Antifragile-Things-That-Gain-Disorder/ dp/ 1400067820/ ref=pd_sim_b_3 [23] 'Hottest thinker in the world' joins faculty September 08, 2008, Polytechnic Institute of New York University (http:/ / www. poly. edu/ news/ fullNews. php?id=1334) [24] http:/ / hq. ssrn. com/ rankings/ Ranking_Display. cfm?TMY_gID=2& TRN_gID=7 [25] http:/ / www. businessweek. com/ magazine/ content/ 11_10/ b4218047676960. htm [26] http:/ / www. fooledbyrandomness. com/ [27] Taleb's author page at Penguin Book's (http:/ / www. penguin. co. uk/ nf/ Author/ AuthorPage/ 0,,1000072283,00. html) [28] www.fooledbyrandomness.com/prologue.pdf [29] page 205 [30] Man Barz. Lebanon's Rational Fools, page 182 (2009). [31] Opacity: What We Do Not See, Quick Footnotes, from homepage of Taleb: paragraphs 32 & 33 & 54 (http:/ / www. fooledbyrandomness. com/ notebook. htm) [32] Cox, Adam. "Blame Nobel for crisis, says author of 'Black Swan'" (http:/ / www. reuters. com/ article/ idUSTRE68R2SK20100928), Reuters (2010-09-28). [33] Taleb on the Financial Crisis, Podcast, Hosted by Russ Roberts, The Library of Economics and Liberty (http:/ / www. econtalk. org/ archives/ 2009/ 03/ taleb_on_the_fi. html) [34] Triana, Pablo. Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets? Wiley Publishing (2009). [35] http:/ / www. fooledbyrandomness. com/ Triana-fwd. pdf [36] Garcia, Cardiff de Alejo. " Q&A Part II: Alternatives to measuring risk (http:/ / www. efinancialnews. com/ story/ 2009-06-12/ q-and-a-part-ii-alternatives-to-measuring-risk)", Financial News (2009-06-12). [37] Cornwell, John. " Random thoughts on the road to riches (http:/ / entertainment. timesonline. co. uk/ tol/ arts_and_entertainment/ books/ non-fiction/ article1708246. ece)", The Sunday Times (2007-04-29). [38] Taleb, The Black Swan, pg 207 [39] http:/ / fooledbyrandomness. com/ whyIwalk. pdf [40] http:/ / edge. org/ response-detail/ 23839 [41] Lund, R. (2007) "Revenge of the white swan," American Statistician, 61(4), 189192. [42] Brown, A. (2007) "Strong language on black swans," American Statistician 61(3), 19597. [43] Black Swan, 2nd, edition, p.353 [44] Westfall, P. and J. Hilbe, "The Black Swan: Praise and criticism," The American Statistician, 61(3), 19394. [45] http:/ / www. ft. com/ cms/ s/ 0/ 824ac36c-f134-11db-838b-000b5df10621. html#axzz2HKRVAHY3 [46] http:/ / www. stat. berkeley. edu/ ~census/ crow. pdf [47] Anuj Gangahar, "Mispriced risk tests market faith in a prized formula" (http:/ / www. ft. com/ cms/ fb971062-0b4c-11dd-8ccf-0000779fd2ac. html), Financial Times, April 16, 2008 [48] Langreth, Robert. " The Oracle of Doom (http:/ / www. forbes. com/ forbes/ 2009/ 0202/ 020. html)", Forbes (2009-01-14). [49] Malcolm Gladwell, What the Dog Saw: And Other Adventures, New york: Little, Brown and Company (2009) p. 75. [50] http:/ / www. fooledbyrandomness. com/ FatTails. html [51] https:/ / docs. google. com/ file/ d/ 0B_31K_MP92hUNjljYjIyMzgtZTBmNS00MGMwLWIxNmQtYjMyNDFiYjY0MTJl/ edit?hl=en_GB [52] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=720581 [53] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=970480 [54] http:/ / www. fooledbyrandomness. com/ TAS. pdf [55] http:/ / www. fooledbyrandomness. com/ LSE-Taleb-Pilpel. pdf [56] http:/ / www. lse. ac. uk/ resources/ riskAndRegulationMagazine/ magazine/ previousEditions. htm [57] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1142785 [58] http:/ / ssrn. com/ abstract=1343042 [59] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1012075 [60] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1398102 [61] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1490769 [62] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1497973 [63] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1669317 [64] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1666042 [65] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1691165 [66] http:/ / www. foreignaffairs. com/ articles/ 67741/ nassim-nicholas-taleb-and-mark-blyth/ the-black-swan-of-cairo [67] http:/ / ssrn. com/ abstract=2156095

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Nassim Nicholas Taleb

[68] http:/ / issuu. com/ deliciouspaper/ docs/ deliciouspaper?mode=embed& documentId=081023201623-ea5e2654a3354d8db3ca58ccf5197f0e& layout=grey [69] http:/ / www. thedrawbridge. org. uk/ issue_16/ be_a_gentleman_on_the_treadmil/ [70] http:/ / www. edge. org/ 3rd_culture/ taleb05/ taleb05_index. html [71] http:/ / www. edge. org/ 3rd_culture/ taleb08/ taleb08. 1_index. html [72] http:/ / www. edge. org/ 3rd_culture/ taleb08/ taleb08_index. html [73] http:/ / www. edge. org/ q2009/ q09_10. html#taleb [74] http:/ / www. edge. org/ q2011/ q11_3. html#taleb

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External links
Nassim Taleb's home page (http://www.fooledbyrandomness.com/) Lecture on Philosophy of Probability (http://www.fooledbyrandomness.com/Princeton-phil.WMA) at Princeton University Nassim Nicholas Taleb (https://www.facebook.com/people/Nassim-Nicholas-Taleb/13012333374) on Facebook Appearances (http://www.c-spanvideo.org/nassimtaleb) on C-SPAN Nassim Nicholas Taleb (http://www.imdb.com/name/nm2643232/) at the Internet Movie Database Nassim Nicholas Taleb (http://www.theguardian.com/books/nassim-nicholas-taleb) collected news and commentary at The Guardian Works by or about Nassim Nicholas Taleb (http://worldcat.org/identities/lccn-n96-74723) in libraries (WorldCat catalog) Interviews Interview (http://www.fooledbyrandomness.com/PhilosophyNow.pdf) with Constantine Sandis Roberts, Russ. "Nassim Taleb Podcasts" (http://www.econtalk.org/archives/_featuring/nassim_taleb/). EconTalk. Library of Economics and Liberty. Nassim Nicholas Taleb Interview June 2010 (http://www.newstatesman.com/ideas/2010/06/ god-cameron-detractors) New Statesman Video : In conversation with Daniel Kahnemann, (http://www.nypl.org/audiovideo/ live-nypl-nassim-taleb-daniel-kahneman) New York Public Library, February 2013 Review FrankVoisin.com (http://www.frankvoisin.com/?p=52) Summary and review of Fooled By Randomness

The Black Swan (2007 book)

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The Black Swan (2007 book)

The Black Swan
U.K. edition bookcover Author Country Language Genre Publisher Publication date Media type Pages ISBN OCLC Number Dewey Decimal Nassim Nicholas Taleb United States English U.S Epistemology, philosophy of science, Randomness Random House (U.S.) Allen Lane (U.K.) April 17, 2007 Print (hardback) 400 pp (hardcover) ISBN 978-1400063512 (U.S.), ISBN 978-0713999952 (U.K.) 71833470 [1]

003/.54 22

LC Classification Q375 .T35 2007 Preceded by Followed by Fooled by Randomness The Bed of Procrustes: Philosophical and Practical Aphorisms

The Black Swan: The Impact of the Highly Improbable is a literary/philosophical book by the epistemologist Nassim Nicholas Taleb. The book focuses on the extreme impact of certain kinds of rare and unpredictable events (outliers) and humans' tendency to find simplistic explanations for these events retrospectively. This theory has since become known as the black swan theory. The book also covers subjects relating to knowledge, aesthetics, and ways of life, and uses elements of fiction in making its points. The first edition appeared in 2007 and was a commercial success. It spent 36 weeks on the New York Times best-seller list. The second, expanded edition appeared in 2010.

Overview: Black Swan theory

Taleb, bestselling author of Fooled by Randomness, treats uncertainty and randomness as a single idea. See Black swan theory for Taleb's definition of a Black Swan event.

Sales
Since being published in 2007, as of February 2011 has sold close to 3 million copies. It spent 36 weeks on the [2] New York Times Bestseller list list; 17 as hardcover and 19 weeks as paperback. It was published in 32 languages.[3]

Coping with Black Swan events

The main idea in Taleb's book is not to attempt to predict Black Swan events, but to build robustness to negative ones that occur and being able to exploit positive ones. Taleb contends that banks and trading firms are very vulnerable to hazardous Black Swan events and are exposed to losses beyond those that are predicted by their defective financial models.

The Black Swan (2007 book) The book's position is that a Black Swan event depends on the observerusing a simple example, what may be a Black Swan surprise for a turkey is not a Black Swan surprise for its butcherhence the objective should be to "avoid being the turkey" by identifying areas of vulnerability in order to "turn the Black Swans white".

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Summary
Nassim Nicholas Taleb refers to the book variously as an essay or a narrative with one single idea: "our blindness with respect to randomness, particularly large deviations."[4] It is Taleb's questioning of why this occurs and his explanations of it that drive the book forward. The book's layout follows "a simple logic"[5] moving from literary subjects in the beginning to scientific and mathematical subjects in the later portions. Part One and the beginning of Part Two delve into psychology. Taleb addresses science and business in the latter half of Part Two and Part Three. Part Four contains advice on how to approach the world in the face of uncertainty and still enjoy life. Taleb acknowledges a contradiction in the book. He uses an exact metaphor, Black Swan idea to argue against the "unknown, the abstract, and imprecise uncertainwhite ravens, pink elephants, or evaporating denizens of a remote planet orbiting Tau Ceti." 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 narratives.... You need a story to displace a story. Metaphors and stories are far more potent (alas) than ideas; they are also easier to remember and more fun to read.[6]

Part one: Umberto Eco's anti-library, or how we seek validation

In the first chapter, the Black Swan theory first is discussed in relation to Taleb's coming of age in the Levant. The author then elucidates his approach to historical analysis. He describes history as opaque, essentially a black box of cause and effect. One sees events go in and events go out, but one has no way of determining which produced what effect. Taleb argues this is due to The Triplet of Opacity.[7] In the second chapter, Taleb discusses a neuroscientist named Yevgenia Nikolayevna Krasnova and her book A Story of Recursion. She published her book on the web and was discovered by a small publishing company; they published her unedited work and the book became an international bestseller. The small publishing firm became a big corporation, and Yevgenia became famous. This incident is described as a Black Swan event. Taleb goes on to admit that the so-called author is a work of fiction. Yevgenia rejects the distinction between fiction and nonfiction. She also hates the very idea of enforcing things into well defined "categories", holding that the world generally is complex and not easy to define. Though female, the character is based, in part, autobiographically on the author (according to Taleb), who has many of the same traits. In the third chapter, Taleb introduces the concepts of Extremistan and Mediocristan. He uses them as guides to define how predictable is the environment one's studying. Mediocristan environments safely can use Gaussian distribution. In Extremistan environments, a Gaussian distribution is used at one's peril. Chapter four brings together the topics discussed earlier in the narrative, about a turkey. Taleb uses it to illustrate the philosophical problem of induction and how past performance is no indicator of future performance. He then takes the reader into the history of skepticism. In Chapter nine, Taleb outlines the multiple topics he previously has described and connects them as a single basic idea.

The Black Swan (2007 book)

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Arguments
The term black swan was a Latin expression its oldest reference is in the poet Juvenal expression that "a good person is as rare as a black swan" ("rara avis in terris nigroque simillima cygno", 6.165).[8] It was a common expression in 16th century London as a statement that describes impossibility, deriving from the old world presumption that 'all swans must be white', because all historical records of swans reported that they had white feathers. Thus, the black swan is an oft cited reference in philosophical discussions of the improbable. Aristotle's Prior Analytics most likely is the original reference that makes use of example syllogisms involving the predicates "white", "black", and "swan." More specifically Aristotle uses the white swan as an example of necessary relations and the black swan as improbable. This example may be used to demonstrate either deductive or inductive reasoning; however, neither form of reasoning is infallible since in inductive reasoning premises of an argument may support a conclusion, but does not ensure it, and, similarly, in deductive reasoning an argument is dependent on the truth of its premises. That is, a false premise may lead to a false result and inconclusive premises also will yield an inconclusive conclusion. The limits of the argument behind "all swans are white" is exposedit merely is based on the limits of experience (e.g. that every swan one has seen, heard, or read about is white). Hume's attack against induction and causation is based primarily on the limits of everyday experience and so too, the limitations of scientific knowledge.

Higher frequency
Rare and improbable events do occur much more than we dare to think.[9] Our thinking usually is limited in scope and we make assumptions based on what we see, know, and assume. Reality, however, is much more complicated and unpredictable than we think. Also, assumptions relevant to average situations are less relevant to irregular situations, especially when the "rules of the game" themselves do change.

The huge effect

Extreme events do happen and have a great effect. The effects of extreme events are even higher due to the fact that they are unexpected. Examples given by Taleb are the September 11, 2001 attacks, the rise of the Internet and particularly Google, and World War I. The results of these were hardly thought of before but were tremendous.

Limits of human knowledge

Taleb's black swan is different from the earlier philosophical versions of the problem, specifically in epistemology, as it concerns a phenomenon with specific empirical and statistical properties which he calls, "the fourth quadrant".[10] Taleb's problem is about epistemic limitations in some parts of the areas covered in decision making. These limitations are twofold: philosophical (mathematical) and empirical (human known epistemic biases). The philosophical problem is about the decrease in knowledge when it comes to rare events as these are not visible in past samples and therefore require a strong a priori, or an extrapolating theory; accordingly, predictions of events depend more and more on theories when their probability is small. In the fourth quadrant, knowledge is both uncertain and consequences are large, requiring more robustness. Before Taleb[citation needed], those who dealt with the notion of the improbable, such as Hume, Mill, and Popper focused on the problem of induction in logic, specifically, that of drawing general conclusions from specific observations. Taleb's Black Swan Event has a central and unique attribute, high impact. His claim is that almost all consequential events in history come from the unexpectedyet humans later convince themselves that these events are explainable in hindsight (bias). Why are humans often caught off guard by or slow to recognize the rare and novel? Partly because built into the very nature of our experience is the propensity to extend existing knowledge and experience to future events and experiences. To exacerbate this natural propensity much of our cultural education both formal and otherwise is built upon historical knowledge forced on us by others. Of course both the natural physiological propensity and the

The Black Swan (2007 book) cultural phenomenon are somewhat a necessary precondition to learning, since complete openness to every event would be inefficient. Bertrand Russell observed, "An open mind is an empty mind." So we cannot be completely open, but we must guard against being completely closed as well. It would be most efficacious if we could find a balance between the known and unknown and the limits of our knowledge and experience. The effect of unexpected events likely is integral to finding this balance. Thus, the rare and unexpected is far more significant to our formation of knowledge than people often imagine. Taleb argues that the proposition "we know", in many cases, is an illusion, albeit a necessary one; the human mind tends to think it knows, but it does not always have a solid basis for this delusion of "I know". This notion that we do not know is very old, dated at least as far back as Socrates. The Socratic method of questioning and avowal of ignorance is the type of corrective action to the delusion that we know something completely and truly. Similarly, to those who might argue that the advancement of science has rendered the world well-known, Taleb argues that while science added knowledge, we always run the risk of experiencing the improbable, rare, and novel. We can be shocked by this knowledge and experience or we can be open to it. As with the dictum of Socrates, "the only thing I know is that I do not know", is as true as ever, Taleb concludes. Taleb further expands this idea of finite knowable worlds (e.g. a game) vs. infinite and thus unknowable worlds (our natural world) in what he calls the Ludic fallacy.

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Not all experts deserve the title

Taleb also questions the authority of experts, asserting that the truth behind science is limited to certain areas and methods. In many areas having an academic degree and presenting oneself as a scientist is irrelevant. Indeed, authority can stifle empirical experience which, so many times, has proven to have a sounder basis for accuracy.

The narrative fallacy

Another issue is the "narrative fallacy"[11] which refers to our tendency to construct stories around facts, which in love for example may serve a purpose, but when someone begins to believe the stories and accommodate facts into the stories, they are likely to err. The historian Professor Hayden White discusses this phenomenon in his writings.

Praise and criticism

Style
Taleb's writing style is essayistic, mixing illustrative anecdotes and personal details with points of argument. Taleb describes his books as "expressed in the form of a personal essay with autobiographical sections, stories, parables, and philosophical, historical, and scientific discussions", while leaving the technical material to a separate text.[12][13] This is similar to Montaigne essays. This style has not gratified everyone. Mathematics professor David Aldous argued that "Taleb is sensible (going on prescient) in his discussion of financial markets and in some of his general philosophical thought, but tends toward irrelevance or ridiculous exaggeration otherwise."[14] Gregg Easterbrook wrote a critical review of The Black Swan in the New York Times[15] to which Taleb replied with a list of logical errors, blaming Easterbrook for not having read the book.[16] In a recent sociological study published in Economy and Society [17], Daniel Beunza and David Stark point out that Taleb only focused on how models create Black Swans. But models, they argue, can also help traders identify Black Swans and avoid them.

The Black Swan (2007 book)

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Praise
The Nobel Prize winning psychologist Daniel Kahneman wrote The Black Swan changed my view of how the world works and explains the influence in his 2011 book Thinking, Fast and Slow.

Notes
[1] [2] [3] [4] [5] [6] http:/ / worldcat. org/ oclc/ 71833470 http:/ / www. businessweek. com/ magazine/ content/ 11_10/ b4218047676960. htm http:/ / www. amazon. com/ The-Black-Swan-Improbable-Robustness/ dp/ 081297381X/ ref=dp_ob_title_bk p.xix. PROLOGUE p.xxviii. PROLOGUE p.xxvii, Taleb call this human tendency the narrative fallacy: we seem to enjoy stories, and we seem to want to remember stories for their own sake. [7] PROLOGUE p8. [8] http:/ / www. jstor. org/ pss/ 294875 [9] http:/ / users. math. yale. edu/ ~bbm3/ web_pdfs/ misbehaviorprelude. pdf [10] The Fourth Quadrant and The Limits of Statistics (http:/ / www. edge. org/ 3rd_culture/ taleb08/ taleb08_index. html) [11] Glossary p. 309. [12] Antifragile: Things That Gain From Disorder, Random House, 2012 [13] https:/ / docs. google. com/ file/ d/ 0B_31K_MP92hUNjljYjIyMzgtZTBmNS00MGMwLWIxNmQtYjMyNDFiYjY0MTJl/ edit?hl=en_GB [14] David Aldous, A critical review of Taleb, Nassim Nicholas. The Black Swan: The impact of the highly improbable (http:/ / www. stat. berkeley. edu/ ~aldous/ 157/ Books/ taleb. html), A.M.S. Notices, March 2011, pp. 427-413 [15] http:/ / www. nytimes. com/ 2007/ 04/ 22/ books/ review/ Easterbrook. t. html?pagewanted=all& _r=0 [16] http:/ / www. fooledbyrandomness. com/ easterbrook. pdf [17] http:/ / papers. ssrn. com/ sol3/ papers. cfm?abstract_id=1285054

References
Taleb, Nassim Nicholas (2007), The Black Swan: The Impact of the Highly Improbable, Random House, ISBN978-1400063512

External links
Author's website (http://www.fooledbyrandomness.com) Black Swan Glossary (http://www.fooledbyrandomness.com/glossary.pdf) Slideshow lecture explaining the Ludic Fallacy with clarity By Peter Taylor of Oxford University (http://www. fhi.ox.ac.uk/teaching and posters/MT07/LudicFallacy.ppt). Nassim Taleb podcast interview on The Black Swan (http://www.econtalk.org/archives/2007/04/ taleb_on_black.html). YouTube Video Explanation (http://www.youtube.com/watch?v=BDbuJtAiABA) Will Davies (2007) 'All in a Flap: Beware of Unknown Unknowns' (http://www.oxonianreview.org/wp/ all-in-a-flap-beware-unknown-unknowns/), review of The Black Swan in the Oxonian Review. After Words interview with Taleb on The Black Swan, September 22, 2007 (http://www.c-spanvideo.org/ program/Nassi)

Black swan theory

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Black swan theory

The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The theory was developed by Nassim Nicholas Taleb to explain: 1. The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology 2. The non-computability of the probability of the A black swan, a member of the species Cygnus atratus consequential rare events using scientific methods (owing to the very nature of small probabilities) 3. The psychological biases that make people individually and collectively blind to uncertainty and unaware of the massive role of the rare event in historical affairs Unlike the earlier philosophical "black swan problem," the "black swan theory" refers only to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences.[1] More technically, in the scientific monograph Lectures on Probability and Risk in the Real World: Fat Tails (Volume 1), Taleb mathematically defines the black swan problem as "stemming from the use of degenerate metaprobability".[2]

Background
Black swan events were introduced by Nassim Nicholas Taleb in his 2001 book Fooled By Randomness, which concerned financial events. His 2007 book The Black Swan extended the metaphor to events outside of financial markets. Taleb regards almost all major scientific discoveries, historical events, and artistic accomplishments as "black swans"undirected and unpredicted. He gives the rise of the Internet, the personal computer, World War I, dissolution of the Soviet Union, and the September 2001 attacks as examples of black swan events.[3] The phrase "black swan" derives from a Latin expression; its oldest Black swan known occurrence is the poet Juvenal's characterization of something being "rara avis in terris nigroque simillima cygno" ("a rare bird in the lands, very much like a black swan"; 6.165). In English, when the phrase was coined, the black swan was presumed not to exist. The importance of the simile lies in its analogy to the fragility of any system of thought. A set of conclusions is potentially undone once any of its fundamental postulates is disproved. In this case, the observation of a single black swan would be the undoing of the phrase's underlying logic, as well as any reasoning that followed from that underlying logic. Juvenal's phrase was a common expression in 16th century London as a statement of impossibility. The London expression derives from the Old World presumption that all swans must be white because all historical records of swans reported that they had white feathers. In that context, a black swan was impossible or at least nonexistent. After Dutch explorer Willem de Vlamingh discovered black swans in Western Australia in 1697, the term metamorphosed to connote that a perceived impossibility might later be disproven. Taleb notes that in the 19th century John Stuart Mill used the black swan logical fallacy as a new term to identify falsification.

Black swan theory Taleb asserts: What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, 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 predictable. I stop and summarize the triplet: rarity, extreme 'impact', and retrospective (though not prospective) predictability. A small number of Black Swans explains 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.

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Identifying a black swan event

Based on the author's criteria: 1. The event is a surprise (to the observer). 2. The event has a major effect. 3. After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals.

Coping with black swan events

The main idea in Taleb's book is not to attempt to predict black swan events, but to build robustness against negative ones that occur and be able to exploit positive ones. Taleb contends that banks and trading firms are very vulnerable to hazardous black swan events and are exposed to losses beyond those predicted by their defective models. On the subject of business in particular, Taleb is highly critical of the widespread use of the normal distribution model as the basis for calculating risk. In the second edition of The Black Swan, Taleb provides "Ten Principles for a Black-Swan-Robust Society".[4] Taleb states that a black swan event depends on the observer. For example, what may be a black swan surprise for a turkey is not a black swan surprise to its butcher; hence the objective should be to "avoid being the turkey" by identifying areas of vulnerability in order to "turn the Black Swans white".

Epistemological approach
Taleb's black swan is different from the earlier philosophical versions of the problem, specifically in epistemology, as it concerns a phenomenon with specific empirical and statistical properties which he calls, "the fourth quadrant".[5] Taleb's problem is about epistemic limitations in some parts of the areas covered in decision making. These limitations are twofold: philosophical (mathematical) and empirical (human known epistemic biases). The philosophical problem is about the decrease in knowledge when it comes to rare events as these are not visible in past samples and therefore require a strong a priori, or an extrapolating theory; accordingly predictions of events depend more and more on theories when their probability is small. In the fourth quadrant, knowledge is both uncertain and consequences are large, requiring more robustness.[citation needed] According to Taleb, thinkers who came before him who dealt with the notion of the improbable, such as Hume, Mill, and Popper focused on the problem of induction in logic, specifically, that of drawing general conclusions from specific observations. The central and unique attribute of Taleb's black swan event is high profile. His claim is that almost all consequential events in history come from the unexpected yet humans later convince themselves that these events are explainable in hindsight.

Black swan theory One problem, labeled the ludic fallacy by Taleb, is the belief that the unstructured randomness found in life resembles the structured randomness found in games. This stems from the assumption that the unexpected may be predicted by extrapolating from variations in statistics based on past observations, especially when these statistics are presumed to represent samples from a normal distribution. These concerns often are highly relevant in financial markets, where major players sometimes assume normal distributions when using value at risk models, although market returns typically have fat tail distributions.[citation needed] Taleb said "I don't particularly care about the usual. If you want to get an idea of a friend's 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 irrelevant. Almost everything in social life is produced by rare but consequential 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 Fraud." More generally, decision theory, based on a fixed universe or a model of possible outcomes, ignores and minimizes the effect of events that are "outside model". For instance, a simple model of daily stock market returns may include extreme moves such as Black Monday (1987), but might not model the breakdown of markets following the 9/11 attacks. A fixed model considers the "known unknowns", but ignores the "unknown unknowns" (Donald Rumsfeld).[citation needed] Taleb notes that other distributions are not usable with precision, but often are more descriptive, such as the fractal, power law, or scalable distributions and that awareness of these might help to temper expectations. Beyond this, he emphasizes that many events simply are without precedent, undercutting the basis of this type of reasoning altogether. Taleb also argues for the use of counterfactual reasoning when considering risk.Wikipedia:Citing sources

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References
[1] [2] [3] [4] [5] Taleb 2010, p.xxi. http:/ / www. fooledbyrandomness. com/ FatTails. html Taleb 2010. Taleb 2010, pp.37478. Taleb 2008.

Bibliography
Taleb, Nassim Nicholas (2010) [2007], The Black Swan: the impact of the highly improbable (http://books. google.com/books?id=tXiBZwEACAAJ&dq=isbn:9780141034591) (2nd ed.), London: Penguin, ISBN9780141034591, retrieved 23 May 2012. (September 2008), "The Fourth Quadrant: A Map of the Limits of Statistics" (http://www.edge.org/ 3rd_culture/taleb08/taleb08_index.html), Third Culture (The Edge Foundation), retrieved 23 May 2012.

Black swan theory

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External links
Ten Principles for a Black Swan Robust World (http://www.fooledbyrandomness.com/tenprinciples.pdf) (PDF), Fooled by randomness. David, Dr. Gil, Black Swans in the Cyber Domain (http://www.israeldefense.com/?CategoryID=512& ArticleID=1297), Israel defense. Black Swan Stocks Could Make Your Portfolio a Turkey (http://www.cnbc.com/id/100280567), CNBC.

Ludic fallacy
The ludic fallacy is a term coined by Nassim Nicholas Taleb in his 2007 book The Black Swan. "Ludic" is from the Latin ludus, meaning "play, game, sport, pastime."[1] It is summarized as "the misuse of games to model real-life situations." Taleb explains the fallacy as "basing studies of chance on the narrow world of games and dice."[2] It is a central argument in the book and a rebuttal of the predictive mathematical models used to predict the future as well as an attack on the idea of applying nave and simplified statistical models in complex domains. According to Taleb, statistics works only in some domains like casinos in which the odds are visible and defined. Taleb's argument centers on the idea that predictive models are based on platonified forms, gravitating towards mathematical purity and failing to take some key ideas into account: It is impossible to be in possession of all the information. Very small unknown variations in the data could have a huge impact. Taleb does differentiate his idea from that of mathematical notions in chaos theory, e.g. the butterfly effect. Theories/Models based on empirical data are flawed, as they cannot predict events that have never happened before, but have tremendous impact. E.g. the 911 terrorist attacks, invention of the automobile, etc.

Examples
Example 1: Suspicious coin
One example given in the book is the following thought experiment. There are two people: Dr John, who is regarded as a man of science and logical thinking. Fat Tony, who is regarded as a man who lives by his wits. A third party asks them, "assume a fair coin is flipped 99 times, and each time it comes up heads. What are the odds that the 100th flip would also come up heads?" Dr John says that the odds are not affected by the previous outcomes so the odds must still be 50:50. Fat Tony says that the odds of the coin coming up heads 99 times in a row are so low (less than 1 in 6.33 1029) that the initial assumption that the coin had a 50:50 chance of coming up heads is most likely incorrect. The ludic fallacy here is to assume that in real life the rules from the purely hypothetical model (where Dr John is correct) apply. Would a reasonable person bet on black on a roulette table that has come up red 99 times in a row (especially as the reward for a correct guess is so low when compared with the probable odds that the game is fixed)? In classical terms, highly statistically significant (unlikely) events should make one question one's model assumptions. In Bayesian statistics, this can be modelled by using a prior distribution for one's assumptions on the fairness of the coin, then Bayesian inference to update this distribution.

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Example 2: Job interview

A man considers going to a job interview. He recently studied statistics and utility theory in college and performed well in the exams. Considering whether to take the interview, he tries to calculate the probability he will get the job versus the cost of the time spent. This young job seeker forgets that real life has more variables than the small set he has chosen to estimate. Even with a low probability of success, a really good job may be worth the effort of going to the interview. Will he enjoy the process of the interview? Will his interview technique improve regardless of whether he gets the job or not? Even the statistics of the job business are non-linear. What other jobs could come the man's way by meeting the interviewer? Might there be a possibility of a very high pay-off in this company that he has not thought of?Wikipedia:Please clarify

Example 3: Stock returns

Any decision theory based on a fixed universe or model of possible outcomes ignores and minimizes the impact of events which are "outside model." For instance, a simple model of daily stock market returns may include extreme moves such as Black Monday (1987) but might not model the market breakdowns following the 2011 Japanese tsunami and its consequences. A fixed model considers the "known unknowns," but ignores the "unknown unknowns."

Relation to Platonicity
The ludic fallacy is a specific case of the more general problem of Platonicity, defined by Taleb as: the focus on those pure, well-defined, and easily discernible objects like triangles, or more social notions like friendship or love, at the cost of ignoring those objects of seemingly messier and less tractable structures.

References
[1] Simpson, D.P. (1987). Cassell's Latin and English Dictionary. New York: Hungry Minds. p. 134. [2] Taleb, Nassim (2007). The Black Swan. New York: Random House. p. 309. ISBN 1-4000-6351-5.

Further reading
Medin, D.; Atran, S. (October 2004). "The native mind: biological categorization and reasoning in development and across cultures". Psychological Review. 111 (4): 96098. Fodor, Jerry (1983). Modularity of Mind. Cambridge, MA: MIT Press. ISBN 9780262260701. Dubner, Stephen J. (August 9, 2007). "Freakonomics Quorum: The Economics of Street Charity" (http:// freakonomics.blogs.nytimes.com/2007/08/09/freakonomics-quorum-the-economics-of-street-charity/). Freakonomics.

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Fooled by Randomness
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
Author Language Genre Publisher Publication date Pages ISBN OCLC Number Dewey Decimal LC Classification Followed by Nassim Nicholas Taleb English Statistics, Philosophy, Finance Random House 2001 316 0-8129-7521-9 60349198 123/.3 22 HG4521 .T285 2005 The Black Swan [1]

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets is a book by Nassim Nicholas Taleb that deals with the fallibility of human knowledge.

Reaction
The book was selected by Fortune as one of the 75 "Smartest Books of All Time." U.S.A Today recounted that many criticisms raised in this book of the financial industry turned out to be justified. Forbes admitted to the book being playful, self-effacing and at times insufferably arrogant, but always thought provoking. The Wall Street Journal (one of the publications that Taleb pokes fun at in his book) called Universa Investments' buys in October 2008 a "Black Swan gain (alluding to the Black Swans mentioned in the book)" The New Yorker (one of the publication which receives more favourable comments in this book) said that the book was to conventional Wall street wisdom what Martin Luthers ninety-nine theses were to the Catholic Church.

Thesis
Taleb sets forth the idea that modern humans are often unaware of the existence of randomness. They tend to explain random outcomes as non-random. Human beings: 1. overestimate causality, e.g., they see elephants in the clouds instead of understanding that they are in fact randomly shaped clouds that appear to our eyes as elephants (or something else); 2. tend to view the world as more explainable than it really is. So they look for explanations even when there are none. Other misperceptions of randomness that are discussed include: Survivorship bias. We see the winners and try to "learn" from them, while forgetting the huge number of losers. Skewed distributions. Many real life phenomena are not 50:50 bets like tossing a coin, but have various unusual and counter-intuitive distributions. An example of this is a 99:1 bet in which you almost always win, but when you lose, you lose all your savings. People can easily be fooled by statements like "I won this bet 50 times". According to Taleb: "Option sellers, it is said, eat like chickens and go to the bathroom like elephants", which is

Fooled by Randomness to say, option sellers may earn a steady small income from selling the options, but when a disaster happens they lose a fortune.

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Editions
In 2001, TEXERE published the first edition of the book. (ISBN 1-58799-071-7, London : Texere, 2001) In 2004, TEXERE published a revamped second edition. In 2005, Random House published a softback edition with more changes. (ISBN ISBN 1-58799-190-X, New York : Random house, 2005) In 2005, a French version appeared, with many unique changes.[citation needed] The book has been translated into 20 languages,[2] and is reported to have sold over half a million copies. Further editions have been published by Penguin (softback, May 2007) and Random House (hardback, October 2008.)

References
[1] http:/ / worldcat. org/ oclc/ 60349198 [2] fooled by randomness (http:/ / www. fooledbyrandomness. com)

External links
Nassim Taleb's home page (http://www.fooledbyrandomness.com/) scroll down there to see a description of the book as well as many media reviews

Article Sources and Contributors

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Article Sources and Contributors

Nassim Nicholas Taleb Source: http://en.wikipedia.org/w/index.php?oldid=574634218 Contributors: 2A01:388:20F:150:0:0:1:1F, 83d40m, 84user, AaCBrown, Afelton, Agingprospect, AlbertaSunwapta, AleXd, Alex Zivoder, AlexMoore300, AlexP, AlfaPiKapa, Amatulic, Amillar, Andrewcallahan, Andrewrp, Anomie, Anonymous Dissident, Antandrus, Anthon.Eff, Anticipation of a New Lover's Arrival, The, Anythingyouwant, Aquamari, Ashley Y, Asim samiuddin, Atlastawake, Avraham, B.Andersohn, BajaaS, Bekant, Bender235, Bobby Tables, BozoTheScary, Bradley0110, BrassensG, CMG, CanisRufus, Capodistria, Carl.schutte, Cgingold, ChildofMidnight, Chuck Baggett, Cjfsyntropy, Cornelius754, Crasshopper, D6, DGG, DVassallo, DancingPhilosopher, Davecotuit, Davejagoda, David Koller, Daviegold, Deipnosophista, Dennis714, Dewritech, Deyyaz, Diannaa, Dickdock, Dlyons493, Dogcow, DominicConnor, Dryman, E.Shubee, Edenscourt, Edfranks, Elroch, Elwikipedista, Enchanter, Epistemeter, Falcon8765, Faradayplank, Fintor, FisherQueen, Flatterworld, Flex, Flipping Mackerel, Flyzap, Fooledbyrandomness, FrankTobia, Futuristcorporation, Gabby.resch, Gavia immer, Geschichte, Giftlite, Glodime, Gobonobo, GoingBatty, Good Olfactory, Gregbard, GregorB, Ground Zero, Grumpyyoungman01, GuzonjinSin, Gwern, Hu12, Hve, IbnAmioun, IbnKhaldoun, IjonTichyIjonTichy, ImperfectlyInformed, Inchiquin, Ingo Jurk, Ioannes Pragensis, Iohannes Animosus, J JMesserly, JEN9841, JForget, JMSwtlk, Jamelan, JanSuchy, Jef-Infojef, Jmabel, Josesuntw, Jweiss11, KConWiki, Kaihsu, Karam.Anthony.K, Kbahey, KelleyCook, Khazar2, Kitrus, Ktlynch, Ktr101, Kummi, Kuru, LG4761, LPedroMachado, Lamro, Laurenjf, Lifebaka, Limit-theorem, Llorando, Lot49a, LoveMonkey, MCarr, MER-C, Maheshmv0412, Malcolmxl5, Marcika, Maurice555, Maxim, Mc4932, Mdy66, Melcombe, Mhartl, Michael Hardy, Micru, Middlevoice, MilborneOne, Milnehouse, Mimihitam, Miss-simworld, Mogism, Montfleur, Mr.Z-man, N419BH, Nagle, Naseem abi shaheen, Natrix964909, Nboccard, NeonMerlin, NewEconomist, Njrwally, Noamz, Notthebestusername, Oldag07, Omnipaedista, Orangemike, Patoldanga'r Tenida, Peak Freak, Peter1c, Phdmaven, Piahiefner, Pleclech, Pmfxoxo, Pontus, Pruneau, R'n'B, Rachelm1978, Radartoothth, Rajah9, Rallette, Redprince, Rijkbenik, Rjwilmsi, Robma, Rodhullandemu, Rolfdobelli, Rosiewoods35, Rothorpe, Roy Fultun, Rrogerss, S3000, SMasters, SPECIFICO, Saint91, Saurael, Sethop, Shawnc, Shortride, Sked123, Skomorokh, SlaineMacRoth, Solian en, Srich32977, Srschwartz, Steve Casburn, Stevenmitchell, Terrek, Tharsaile, Threeafterthree, Thumperward, Tinlash, Tom Reedy, Tomvanbraeckel, Torontonian1, Tpbradbury, Trade2tradewell, Txomin, Ulner, Unogeo, Untrue Believer, Urbanrenewal, Urgos, Vanished user fij2093ju5mf8j23romsg, Vanished user kijsdion3i4jf, Vasi, Vegaswikian, Verne Equinox, WannaBeSkeptic, Wescbell, Willsmith, Woohookitty, YechezkelZilber, Zumbo, 636 anonymous edits The Black Swan (2007 book) Source: http://en.wikipedia.org/w/index.php?oldid=574105403 Contributors: "alyosha", 83d40m, Anarchia, Ancheta Wis, Andycjp, Antandrus, Arvidhalvorsen, Augsburgmiller, AxelBoldt, Bender235, Blackguard SF, Cornelius754, DominicConnor, EdwardLane, Equilibrial, Etr52, F15 sanitizing eagle, Frank Appel, FrenchieAlexandre, Geeteshgadkari, Gobonobo, Grayfell, Grumpyyoungman01, Gwern, HappyInGeneral, Herda050, Hroulf, Hu, IbnAmioun, Iridescent, JMSwtlk, Jim.henderson, Jjcon1, John Christopher Wells, Johnfos, Josesuntw, Jsnx, Jweiss11, KConWiki, KelleyCook, Kevinalewis, Kgf0, Ktlynch, Kubrick114, Kuru, L736E, Lamro, Littleolive oil, Logical Cowboy, LoveMonkey, MCarr, Mahlon, Markdery, Markpackuk, Mathwhiz 29, Mav12321, Mdy66, Michael Hardy, Michaelmas1957, Mimihitam, Mintrick, Molestash, Mors Principium Est, Murtuzi, Nabeth, Nbarth, Neilplatform1, Nice poa, PKT, Parneix, PasswordUsername, Pegship, Petzl, Pythn, Rajah9, Rgdboer, RyanHoliday, Sailsbystars, Schaefer, SchreiberBike, Skomorokh, Squids and Chips, Srich32977, Stephenpdickey, Tesscass, The Evil IP address, Thumperward, Trbdavies, Ttnewton, Vanished user kweiru239aqwijur3, Vasiliy Faronov, Wikidrone, XPEHOPE3, YechezkelZilber, Youngwaves, Zoidbergmd, Zzzmarcus, , 92 anonymous edits Black swan theory Source: http://en.wikipedia.org/w/index.php?oldid=572972432 Contributors: 4RugbyRd, 83d40m, AHMartin, Ac44ck, Acroterion, Alansohn, Albert2810, AmanfromMars, Anarchia, Ancheta Wis, Anticipation of a New Lover's Arrival, The, Antonio Lopez, Army1987, Asav, Ashley Y, Ask123, Augsburgmiller, Aw2003, Balldeagle, Banej, Benandorsqueaks, Bender235, Blackguard SF, Brit2010, CWenger, CanadianLinuxUser, Captain Screebo, Carlsbad science, Charles Matthews, Charles T. Betz, Chrisreen, Comptrad, Cybercobra, Cygnis insignis, Dandv, David from Downunder, DavidRF, Dduane, Dihedral, Discott, Dougthebug, Dr.K., Drmies, Dude1818, Duoduoduo, Edenscourt, Electron9, Elonka, Escolom, Eyesnore, Faganp, Fang Teng, FeralOink, Giftlite, Gilliam, GordonWoo, Grafen, Gregbard, Grumpyyoungman01, Hamiltondaniel, Harold f, Heron, HiMyNameIsFrancesca, Hmains, Hu, Hu12, Huw Powell, INS Pirat, IbnAmioun, IbnKhaldoun, Igorkrupitsky, J JMesserly, JMSwtlk, Jackessone2715, JamesBWatson, JamesRust11, JazzyGroove, Jed keenan, Jhertel, Jimmaths, Jimp, Johnuniq, Justin Mulder, Jwm353s, KConWiki, KelleyCook, Kuru, Kvikram, Lamro, Lev Janashvili, Lgfcd, Limit-theorem, LoveMonkey, MER-C, Markhebner, MartinPoulter, Mattbuck, Maury Markowitz, Mdwh, Mdz, Michael Hardy, Micru, Mimihitam, Mplsray, Mrwojo, Muhammad Hamza, Mygerardromance, MythoMcMyth, Nbarth, Nevit, NewEconomist, Nickg, Noah Salzman, Nocat50, Nyttend, Obobskivich, Oparadoha, Ost316, P.F. Duarte, Paine Ellsworth, Palfrey, Pdeitiker, Pharmakis, Phildogg82, Philip Trueman, Pm master, Pnedelisky, ProtossPylon, Quick and Dirty User Account, Rasputin243, Reaper Eternal, Regan T. Vientos, Rich Farmbrough, Rjwilmsi, RobEby, Robfrost, Rrostrom, Rui Gabriel Correia, SDJ, Schutz, Ser Amantio di Nicolao, ShattuckCreek, Sith Lord 13, Skomorokh, Slightsmile, SluggoOne, Soliloquial, Squids and Chips, Srich32977, TallNapoleon, Tarotcards, The wub, Thecinimod, Tiddly Tom, Tide rolls, Tinkerbell564311, Ttnewton, Tysto, Ulner, Upsidown, Vanished user kweiru239aqwijur3, Veralto, Vlad koltun, Volcycle, Wcherowi, Wereon, Will Beback Auto, William Avery, Wizard191, YechezkelZilber, Yogotriks, Youngwaves, Yvwv, ZRFKAU, 293 anonymous edits Ludic fallacy Source: http://en.wikipedia.org/w/index.php?oldid=572517845 Contributors: Aaron Kauppi, Andycjp, Arthur Rubin, BigHairRef, Boffob, Chris 73, Ciphergoth, Cretog8, Cybercobra, DoctorKubla, Edenscourt, Epistemeter, Eric Kvaalen, Everyking, FeralOink, Gregbard, Hakeem.gadi, Herda050, Heron, Horrisgoesskiing, Intellectual47, JMSwtlk, Jarble, Jrf, Jweiss11, KConWiki, KelleyCook, Khazar, Lachambre, Lamro, Lasindi, Lolo Sambinho, LoveMonkey, MER-C, Malcolmxl5, Merriam, Michael Hardy, Nbarth, OrangeDog, Paradoctor, ReverendDave, Robert Brockway, Rrostrom, Schi, Skomorokh, Srich32977, Staszek Lem, Stephen378, The Mysterious El Willstro, Uranographer, VinceBowdren, YechezkelZilber, Znmlnkth, 42 anonymous edits Fooled by Randomness Source: http://en.wikipedia.org/w/index.php?oldid=574105077 Contributors: Antandrus, Atlantisiron, Caerwine, ChrisG, Colonies Chris, Cornelius754, D3, DOSGuy, DavidSJ, Epistemeter, Esradekan, Fintor, Gogarburn, Gregbard, Gruber, JanSuchy, Jweiss11, KConWiki, KelleyCook, LGagnon, Lamro, LoveMonkey, Malcolmxl5, MoraSique, Myrvin, Notthebestusername, PasswordUsername, Pdeitiker, Pegship, Phillopian, Polisher of Cobwebs, Quercus basaseachicensis, RichardF, Rjwilmsi, Robofish, Sailsbystars, Salsb, Skomorokh, Srich32977, Stefan Kruithof, Superm401, TastyPoutine, Teratornis, Ulner, UnitedStatesian, Vespristiano, Wikidrone, YUL89YYZ, YechezkelZilber, 35 anonymous edits

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Image Sources, Licenses and Contributors

File:Taleb mug.JPG Source: http://en.wikipedia.org/w/index.php?title=File:Taleb_mug.JPG License: Attribution Contributors: Sarah Josephine Taleb File:Taleb student.png Source: http://en.wikipedia.org/w/index.php?title=File:Taleb_student.png License: Copyrighted free use Contributors: Nassim Nicholas Taleb File:Cygnus Atratus Singapore.jpg Source: http://en.wikipedia.org/w/index.php?title=File:Cygnus_Atratus_Singapore.jpg License: Creative Commons Attribution-ShareAlike 3.0 Unported Contributors: Img by Calvin Teo File:Swan 01207.jpg Source: http://en.wikipedia.org/w/index.php?title=File:Swan_01207.jpg License: GNU Free Documentation License Contributors: Nevit Dilmen

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License
Creative Commons Attribution-Share Alike 3.0 //creativecommons.org/licenses/by-sa/3.0/