Guide to Nassim Nicholas Taleb's The Black Swan

By IRB Media

PLEASE NOTE: This is a companion to Nassim Nicholas Taleb's The Black Swan and NOT the original book.

Preview:

The Black Swan by Nassim Nicholas Taleb is a philosophical treatment of Taleb's research on highly improbable, high-impact events. These events, which Taleb calls “Black Swans,” are so improbable that they are unpredictable.

Inside this companion:

• Overview of the book

• Important People

• Key Insights

• Analysis of Key Insights

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• Language: English
• Publisher: IRB Media
• Release date: Dec 10, 2016
• ISBN: 9781944195496

IRB Media

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Book preview

Overview

The Black Swan by Nassim Nicholas Taleb is a philosophical treatment of Taleb's research on highly improbable, high-impact events. These events, which Taleb calls Black Swans, are so improbable that they are unpredictable. However, pundits and scholars are often inclined to fit such extreme events into a causal narrative after the fact, in order to make history appear more organized.

In fact, predictive models rely on data from the past, and this past data biases predictive models against unprecedented, disruptive, and possibly calamitous events. By definition, such Black Swan events cannot be predicted using these models. For models of wealth or creative work, for example, the normal bell curve distribution is an inadequate model because a single extreme observation can shift the entire distribution. For such data sets, Mandelbrotian fractal distributions are more useful. Fractal models account for the apparent smoothness of data that include huge outliers like Black Swans, as well as the inequality of specific subsets of that data that do not include these outliers.

Professional forecasters and scholars struggle to grasp the unpredictability of extreme events, and they prefer to invent a narrative to make the unpredictable seem predictable in retrospect. They also think extreme events can be predicted with models of statistical probability, but those models eliminate complexities and externalities that lead to Black Swan outliers. The human mind also has difficulty comprehending the