Antifragile: Things That Gain From Disorder (Incerto, #4)

by Nassim Nicholas Taleb

Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.

The antifragile loves randomness and uncertainty, which also means—crucially—a love of errors, a certain class of errors. Antifragility has a singular property of allowing us to deal with the unknown, to do things without understanding them—and do them well. Let me be more aggressive: we are largely better at doing than we are at thinking, thanks to antifragility. I’d rather be dumb and antifragile than extremely smart and fragile, any time.

anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.

At no point in history have so many non-risk-takers, that is, those with no personal exposure, exerted so much control. The chief ethical rule is the following: Thou shalt not have antifragility at the expense of the fragility of others.

In short, the fragilista (medical, economic, social planning) is one who makes you engage in policies and actions, all artificial, in which the benefits are small and visible, and the side effects potentially severe and invisible.

Simply, in a given subject, when you discuss an item or a policy, the task is to find in which category of the Triad one should put it and what to do in order to improve its condition.

Fragil robust antifragile

If you want to become antifragile, put yourself in the situation “loves mistakes”—to the right of “hates mistakes”—by making these numerous and small in harm. We will call this process and approach the “barbell” strategy.

The sword of Damocles represents the side effect of power and success: you cannot rise and rule without facing this continuous danger—someone out there will be actively working to topple you. And like the sword, the danger will be silent, inexorable, and discontinuous.

fiscal deficits have proven to be a prime source of fragility in social and economic systems.

Let us call Mithridatization the result of an exposure to a small dose of a substance that, over time, makes one immune to additional, larger quantities of it.

Humans somehow fail to recognize situations outside the contexts in which they usually learn about them.

The excess energy released from overreaction to setbacks is what innovates!

In the complex world, the notion of “cause” itself is suspect; it is either nearly impossible to detect or not really defined—another

causal opacity: it is hard to see the arrow from cause to consequence, making much of conventional methods of analysis, in addition to standard logic, inapplicable.

the most interesting aspect of evolution is that it only works because of its antifragility; it is in love with stressors, randomness, uncertainty, and disorder—while individual organisms are relatively fragile, the gene pool takes advantage of shocks to enhance its fitness.

Black Swan Management 101: nature (and nature-like systems) likes diversity between organisms rather than diversity within an immortal organism,

while hormesis corresponds to situations by which the individual organism benefits from direct harm to itself, evolution occurs when harm makes the individual organism perish and the benefits are transferred to others, the surviving ones, and future generations.

But one does not need to accept the specific biological theory (like aging proteins and autophagy) to buy the general idea that survival pressures within the organism play a role in its overall improvement under external stress.

When you are fragile, you depend on things following the exact planned course, with as little deviation as possible—for deviations are more harmful than helpful. This is why the fragile needs to be very predictive in its approach, and, conversely, predictive systems cause fragility.

When you want deviations, and you don’t care about the possible dispersion of outcomes that the future can bring, since most will be helpful, you are antifragile.

Good systems such as airlines are set up to have small errors, independent from each other—or, in effect, negatively correlated to each other, since mistakes lower the odds of future mistakes.

Further, my characterization of a loser is someone who, after making a mistake, doesn’t introspect, doesn’t exploit it, feels embarrassed and defensive rather than enriched with a new piece of information, and tries to explain why he made the mistake rather than moving on. These types often consider themselves the “victims” of some large plot, a bad boss, or bad weather.

This is the central illusion in life: that randomness is risky, that it is a bad thing—and that eliminating randomness is done by eliminating randomness.

The more variability you observe in a system, the less Black Swan–prone it is.

anything locked into planning tends to fail precisely because of these attributes—it is quite a myth that planning helps corporations: in fact we saw that the world is too random and unpredictable to base a policy on visibility of the future.

We can also see from the turkey story the mother of all harmful mistakes: mistaking absence of evidence (of harm) for evidence of absence, a mistake that we will see tends to prevail in intellectual circles and one that is grounded in the social sciences.

When we look at risks in Extremistan, we don’t look at evidence (evidence comes too late), we look at potential damage: never has the world been more prone to more damage; never.6 It is hard to explain to naive data-driven people that risk is in the future, not in the past.

To summarize, the problem with artificially suppressed volatility is not just that the system tends to become extremely fragile; it is that, at the same time, it exhibits no visible risks.

every time you visit a doctor and get a treatment, you incur risks of such medical harm, which should be analyzed the way we analyze other trade-offs: probabilistic benefits minus probabilistic costs.

The true hero in the Black Swan world is someone who prevents a calamity and, naturally, because the calamity did not take place, does not get recognition—or a bonus—for it.

To conclude, the best way to mitigate interventionism is to ration the supply of information, as naturalistically as possible.

It is the system and its fragility, not events, that must be studied—what physicists call “percolation theory,” in which the properties of the randomness of the terrain are studied, rather than those of a single element of the terrain.

Stoicism, seen this way, becomes pure robustness—for the attainment of a state of immunity from one’s external circumstances, good or bad, and an absence of fragility to decisions made by fate, is robustness.

The first step toward antifragility consists in first decreasing downside, rather than increasing upside; that is, by lowering exposure to negative Black Swans and letting natural antifragility work by itself.

In other words, if something is fragile, its risk of breaking makes anything you do to improve it or make it “efficient” inconsequential unless you first reduce that risk of breaking. As Publilius Syrus wrote, nothing can be done both hastily and safely—almost nothing.

For antifragility is the combination aggressiveness plus paranoia—clip your downside, protect yourself from extreme harm, and let the upside, the positive Black Swans, take care of itself.

So just as Stoicism is the domestication, not the elimination, of emotions, so is the barbell a domestication, not the elimination, of uncertainty.

Like Britain in the Industrial Revolution, America’s asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms of trial and error, with no comparative shame in failing, starting again, and repeating failure.

For randomness plays a role at two levels: the invention and the implementation.

But it took me a lifetime to figure out the second point: implementation does not necessarily proceed from invention. It, too, requires luck and circumstances.

So let us call the green lumber fallacy the situation in which one mistakes a source of necessary knowledge—the greenness of lumber—for another, less visible from the outside, less tractable, less narratable.

Practitioners don’t write; they do. Birds fly and those who lecture them are the ones who write their story. So it is easy to see that history is truly written by losers with time on their hands and a protected academic position.

It means the right policy would be what is called “one divided by n” or “1/N” style, spreading attempts in as large a number of trials as possible: if you face n options, invest in all of them in equal amounts.6 Small amounts per trial, lots of trials, broader than you want. Why? Because in Extremistan, it is more important to be in something in a small amount than to miss it. As one venture capitalist told me: “The payoff can be so large that you can’t afford not to be in everything.”

absence of evidence is not evidence of absence, a simple point that has the following implications: for the antifragile, good news tends to be absent from past data, and for the fragile it is the bad news that doesn’t show easily.

In the antifragile case (of positive asymmetries, positive Black Swan businesses), such as trial and error, the sample track record will tend to underestimate the long-term average; it will hide the qualities, not the defects.

In the fragile case of negative asymmetries (turkey problems), the sample track record will tend to overestimate the long-term average; it will hide the defects and display the qualities.

(i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more

(iv) Make sure you are barbelled, whatever that means in your business.

So the reader can see how the ancients saw naive rationalism: by impoverishing—rather than enhancing—thought, it introduces fragility. They knew that incompleteness—half-knowledge—is always dangerous.

The need to focus on the payoff from your actions instead of studying the structure of the world (or understanding the “True” and the “False”) has been largely missed in intellectual history.