The Black Swan: The Impact of the Highly Improbable (Incerto, #2)

by Nassim Nicholas Taleb

Lottery-ticket fallacy: the naïve analogy equating an investment in collecting positive Black Swans to the accumulation of lottery tickets. Lottery tickets are not scalable.

Ludic fallacy (or uncertainty of the nerd): the manifestation of the Platonic fallacy in the study of uncertainty; basing studies of chance on the narrow world of games and dice.

Mandelbrotian Gray Swan: Black Swans that we can somewhat take into account—earthquakes, blockbuster books, stock market crashes—but for which it is not possible to completely figure out the properties and produce precise calculations.

Narrative discipline: the discipline that consists in fitting a convincing and well-sounding story to the past. Opposed to experimental discipline.

Narrative fallacy: our need to fit a story or pattern to a series of connected or disconnected facts. The statistical application is data mining.

Nerd knowledge: the belief that what cannot be Platonized and studied does not exist at all, ...

Platonic fold: the place where our Platonic representation enters into contact with reality and you can see the side effects of models.

Platonicity: 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.

Probability distribution: the model used to calculate the odds of different events, h...

Randomness as incomplete information: simply, what I cannot guess is random because my knowledge about the causes is incomplete, not necessarily because the process has truly unpredictable properties.

Retrospective distortion: examining past events without adjusting for the forward passage of time. It leads to the illusion of posterior predictability.

Reverse-engineering problem: It is easier to predict how an ice cube would melt into a puddle than, looking at a puddle, to guess the shape of the ice cube that may have caused it. This “inverse problem” makes narrati...

Round-trip fallacy: the confusion of absence of evidence of Black Swans (or something else) for evidence of absence o...

Scandal of prediction: the poor prediction record in some forecasting entities (particularly narrative disciplines) mixed with verbose commentary and a lack of awareness of their own dire past record.

Scorn of the abstract: favoring contextualized thinking over more abstract, though more relevant, matters. “The death of one child is a tragedy; the death of a million is a statistic.”

Uncertainty of the deluded: people who tunnel on sources of uncertainty by producing precise sources like the great uncertainty principle, or similar, less consequential matters, to real life; worrying about subatomic particles while forgetting that we can’t predict tomorrow’s crises.