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January 28 - April 29, 2018
The central idea of this book concerns our blindness with respect to randomness, particularly the large deviations: Why do we, scientists or nonscientists, hotshots or regular Joes, tend to see the pennies instead of the dollars?
Why do we keep focusing on the minutiae, not the possible significant large events, in spite of the obvious evidence of their huge influence? And, if you follow my argument, why does reading the newspaper actually decrease your knowledge of the world?
The next killing in the restaurant industry needs to be an idea that is not easily conceived of by the current population of restaurateurs. It has to be at some distance from expectations. The more unexpected the success of such a venture, the smaller the number of competitors, and the more successful the entrepreneur who implements the idea.
The payoff of a human venture is, in general, inversely proportional to what it is expected to be.
What you know cannot really hurt you.
The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events.
our cumulative prediction errors for political and economic events are so monstrous that every time I look at the empirical record I have to pinch myself to verify that I am not dreaming. What is surprising is not the magnitude of our forecast errors, but our absence of awareness of it.
scientific discovery and venture capital investments—there is a disproportionate payoff from the unknown, since you typically have little to lose and plenty to gain from a rare event.
The strategy for the discoverers and entrepreneurs is to rely less on top-down planning and focus on maximum tinkering and recognizing opportunities when they present themselves. So I disagree with the followers of Marx and those of Adam Smith: the reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or “incentives” for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can.
We do not spontaneously learn that we don’t learn that we don’t learn. The
Evidence shows that we do much less thinking than we believe we do—except, of course, when we think about it.
everybody knows that you need more prevention than treatment, but few reward acts of prevention.
GIF, Great Intellectual Fraud.
What I call Platonicity, after the ideas (and personality) of the philosopher Plato, is our tendency to mistake the map for the territory, to focus on pure and well-defined “forms,” whether objects, like triangles, or social notions, like utopias (societies built according to some blueprint of what “makes
sense”), even nationalities.
Platonicity is what makes us think that we understand more than we actually do.
The Platonic fold is the explosive boundary where the Platonic mind-set enters in contact with messy reality, where the gap between what you know and what you think you know becomes dangerously wide. It is here that the Black Swan is produced.
Ideas come and go, stories stay.
Anyone looking for confirmation will find enough of it to deceive himself—and no doubt his peers.*
The Black Swan idea is based on the structure of randomness in empirical reality.
We tend to treat our knowledge as personal property to be protected and defended. It is an ornament that allows us to rise in the pecking order. So this tendency to offend Eco’s library sensibility by focusing on the known is a human bias that extends to our mental operations.
History is opaque. You see what comes out, not the script that produces events, the generator of history.
minds of the gods cannot be read just by witnessing their deeds.
(history seems clearer and more organized in history books than in empirical reality);
Much of what took place would have been deemed completely crazy with respect to the past. Yet it did not seem that crazy after the events. This retrospective plausibility causes a discounting of the rarity and conceivability of the event.
person, the better sounding the explanation. What’s more worrisome is that all these beliefs and accounts appeared to be logically coherent and devoid of inconsistencies.
the studious examination of the past in the greatest of detail does not teach you much about the mind of History; it only gives you the illusion of understanding it.
French belief that Hitler was a transitory phenomenon, which explained their lack of preparation and subsequent rapid capitulation. At no time was the extent of the ultimate devastation deemed possible.
uncertainty. I wanted to be a philosopher, not knowing at the time what most professional philosophers did for a living.
noticed that very intelligent and informed persons were at no advantage over cabdrivers in their predictions,
Nobody knew anything, but elite thinkers thought that they knew more than the rest because they were elite thinkers, and if you’re a member of the elite, you automatically know more than the nonelite.
Categorizing is necessary for humans, but it becomes pathological when the category is seen as definitive, preventing people from considering the fuzziness of boundaries, let alone revising their categories.
Pyrrhic
separating regularity from the coincidental in historical matters.
It shields you from prostituting your mind and frees you from outside authority—any
the problem lay not in the nature of events, but in the way we perceived them.
She received enough attention to get the courtesy of rejection letters and occasional insulting comments instead of the far more insulting and demeaning silence.
“amateurs write for themselves, professionals write for others.”
On the critical difference between speculators and prostitutes—Fairness, unfairness, and Black Swans—Theory of knowledge and professional incomes—How Extremistan is not the best place to visit, except, perhaps, if you are a winner
The next time someone pesters you with unneeded advice, gently remind him of the fate of the monk whom Ivan the Terrible put to death for delivering uninvited (and moralizing) advice. It works as a short-term cure.
to get a profession that is “scalable,” that is, one in which you are not paid by the hour and thus subject to the limitations of the amount of your labor. It
separated the “idea” person, who sells an intellectual product in the form of a transaction or a piece of work, from the “labor” person, who sells you his work.
When your sample is large, no single instance will significantly change the aggregate or the total.
In Extremistan, inequalities are such that one single observation can disproportionately impact the aggregate, or the total.
unpredicted. As hard as you try, you will never lose a lot of weight in a single day; you need the collective effect of many days, weeks, even months.
Problem of Inductive Knowledge
There are traps built into any kind of knowledge gained from observation.
how can we figure out properties of the (infinite) unknown based on the (finite) known?
A turkey before and after Thanksgiving. The history of a process over a thousand days tells you nothing about what is to happen next. This naïve projection of the future from the past can be applied to anything.
Mistaking a naïve observation of the past as something definitive or representative of the future is the one and only cause of our inability to understand the Black Swan.
