The black swan book pdf


latory book, Taleb explains everything we know about what we don't know. He offers surprisingly simple tricks for dealing with black swans and ben efiting from . author categorizes as “Black Swans” (sometimes, more been often referred to as “Hume's Black Swan” 1 in books represent half of the total unit sales. The book's central thesis, that the statistical models beloved by mainstream Taleb's central metaphor of the eponymous black swan arises from the fact that.

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The Black Swan Book Pdf

As Nassim Taleb describes it, a Black Swan is an event that displays three key apoplexy when it comes to mainstream economists—makes the book an. "Black swans" are highly consequential but unlikely events that are easily for a thrilling, disturbing, contentious and unforgettable book on chance and. Editorial Reviews. Review. Bestselling author Nassim Nicholas Taleb continues Engaging and enlightening, The Black Swan is a book that may change the way you think about the world, a book that Chris Anderson calls, .

A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives. Why do we not acknowledge the phenomenon of black swans until after they occur? Part of the answer, according to Taleb, is that humans are hardwired to learn specifics when they should be focused on generalities. We restrict our thinking to the irrelevant and inconsequential, while large events continue to surprise us and shape our world. Elegant, startling, and universal in its applications, The Black Swan will change the way you look at the world. Taleb is a vastly entertaining writer, with wit, irreverence, and unusual stories to tell. He has a polymathic command of subjects ranging from cognitive science to business to probability theory. The Black Swan is a landmark book—itself a black swan. We eagerly romp with him through the follies of confirmation bias [and] narrative fallacy. The Black Swan has appealing cheek and admirable ambition.

The Black Swan Key Idea 4: The way that our brains categorize information makes accurate predictions extremely difficult. During our evolution, the human brain developed certain ways to categorize information.

The Black Swan PDF Summary

For instance, one way we incorrectly categorize information is the so-called narrative fallacy, where we create linear narratives to describe our current situation. To make sense of it all, our brains select only that information it considers important. In order to give meaning to these unconnected bits of information, we turn them into a coherent narrative. For example, when you reflect on your own life, you probably select only certain events as meaningful, and you order those events into a narrative that explains how you became who you are.

For example, you love music because your mom used to sing songs by The Beatles to you every night.

However, creating such narratives is a poor way to gain any meaningful understanding of the world. The fact is that tiny, apparently insignificant events can have unpredictable, major consequences.

Imagine, for example, that a butterfly flapping her wings in India causes a hurricane one month later in New York City. But since we only see the outcome — in this case, the hurricane — then all we can do is guess at which of the simultaneously occurring events actually influenced that outcome.

We humans have developed many methods and models for categorizing information and making sense of the world. But the difference between those types is fundamental. Non-scalable information — such as body weight and height — has a definite, statistical upper and lower limit. On the other hand, non-physical or fundamentally abstract things, like the distribution of wealth or album sales, are scalable. Furthermore, because the transactions take place online, there is no shortage of physical currency to prevent you from selling a trillion albums.

This difference between scalable and non-scalable information is crucial if you want to have an accurate picture of the world. And trying to apply those rules that are effective with non-scalable information to scalable data will only lead to mistakes. For example, say that you want to measure the wealth of the population of England.

The simplest way to do this is to work out their per capita wealth, by adding up their total income and dividing that figure by the number of citizens. We all like to keep ourselves safe from harm, and one of the ways that we do this is assessing and managing the possibility of risk. To better understand the impact of the unlikely, Nassim Taleb divides human knowledge into two main areas of randomness, separating the two major groups of unlikely effects in our lives.

By dividing the improbable into two large groups, it becomes easier to understand how it deceives us and thus proves our inability to make predictions. The first of them is called by Taleb of Mediochristian, describing a land where averages are the rule. In Mediochristian our sampling of information and data available is very large, and no single fact will change the way the model works. The data in this context is not scalable, as it has defined a minimum and a maximum limit.

Examples of Mediochristian information are, for example, physical characteristics such as height and body weight, and even IQ. Since the properties of such non-scalable information are certainly limited, it is possible to make relatively accurate predictions about the means.

In Extremistan, the information is so disproportionate that a single observation can dramatically impact our observations and mislead our ability to make predictions.

Examples of data and information emerging from the Far East are far more diverse. Examples include: Deaths in terrorist attacks, book sales by an author, inflation rates.

Other than data such as height and weight, wealth distribution and album sales are scalable items. For example, you can sell your book in digital format through Kindle infinitely, because the digital format does not require you to print a book with each copy sold.

Another example is wealth, which is highly scalable: And if you analyze the data looking at the average, you can be deceived with a representation of the income distribution that does not accurately reflect the reality of people. Be careful not to be turkey on Thanksgiving Day… Imagine the following scenario. You are a turkey, which is fed daily, well taken care of every day, for years and your life is going ok.

But on Thanksgiving, a surprise occurs. You are not fed, you are murdered and eaten by the people who feed you.

That is the metaphor that Taleb uses to illustrate how to observe the past to predict the future. It also proves that the Black Swans are relative. For you the turkey , the Thanksgiving dinner is definitely a Black Swan, but for the Thanksgiving dinner cook, there is no surprise in this event.

We often look at our lives as if things were happening in the Mediochristian, when, in fact, life occurs much more in the kingdom of Extremistan.

To learn to deal with this, one must accept, embrace and understand the unpredictable nature of the world, rather than ignore it.

That will not make you not be the turkey, but at least it will allow you not to get accustomed to the status quo. Our brains play tricks on us. We tend to conclude that similar sounding phrases have absurdly different meanings. The lack of proof that something exists does not mean that it does not exist. It is not because there has never been an earthquake in your city, that it will never occur, will it?

But given our ignorance, to seek evidence that what we believe is real can greatly limit our line of thought and make us ignore information that does not support our beliefs.

Book review slides "The Black Swan"

It is often more valuable to search for facts that go against our beliefs than those which support it. That leads to much more powerful discoveries and allows us not to be blinded. Another flaw in our operating system is that we are in the habit of creating stories based on collections of events that occur in our lives.

The author calls this failure a narrative fallacy. It is characterized by exploiting our limited ability to analyze sequences of events without adding an explanation to them. Explanations tie the facts and make them easier to remember, but our brains always seek to tell a story where events are correlated and meaningful. However, by condensing facts into a single narrative, we end up generating a loss of information and have a great tendency to oversimplify things. We discard the data that makes no sense in our history, and that leaves us at the mercy of the swans.

According to cognitive psychologists, we have two kinds of thoughts. Type 1 thinking is instinctive, fast, immediate, and based on your experience with the world. This system is advantageous for having high speed and helps you react quickly to external stimuli but is also very prone to errors.

System 2, on the other hand, is slow, rational and self-aware, much more useful in the classroom not at a time of quick thinking between life and death. The problem is that we often confuse thoughts from system 1 with system 2 because at level 1 we have no control over them. Often, we believe that the thoughts that come from system 1 are based on analysis rather than reflexes, and this harms our cognition.

System 1 leaves us blind to Black Swans and often misinterprets them as well. System 1 considers primarily anecdotal data and based on our experience rather than using statistics or empirical data.

Know your brain. Have you ever dreamt of being a great author or creating a great company in an innovative market? If this is what you seek, Taleb has an interesting point of view. The human being needs constant, tangible results and rewards to continue to pursue something.

A number of small, constant rewards usually bring more happiness and fulfillment than a substantial reward. This incident is described as a Black Swan event. The book goes on to admit that the so-called author is a work of fiction.

Yevgenia rejects the distinction between fiction and nonfiction.

The Black Swan: Second Edition

She also hates the very idea of forcing 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. The third chapter introduces the concepts of Extremistan and Mediocristan.

He uses them as guides to define how predictable the environment one's studying is. Mediocristan environments safely can use Gaussian distribution. In Extremistan environments, a Gaussian distribution should be used at one's own peril. Chapter four brings together the topics discussed earlier, into a 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. In chapter thirteen, the book discusses what can be done regarding epistemic arrogance.