The Black Swan

March 11th, 2008 by zen

 I finally started reading Nassim Nicholas Taleb’s  The Black Swan: The Impact of the Highly Improbable today and I’m already impressed with it. Taleb’s very straightforward in attacking the limitations of Bell Curve assumptions and the common assumptions regarding the extent of uncertainty ( most people, unless they are futurists or, say, design computer models, seldom contemplate questions of deep uncertainty that might be in play). The book is really a tutorial on epistemology.

I’ll review this one when I’m finished.

Posted in black swans, Epistemology, gaussian, risk | 10 comments

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  1. Moon:

    March 11th, 2008 at 2:48 pm

    The scope is broad and deep.  I read it last autumn, a focused yet casual first pass over the course of 2-3 months.  I am going to need a deeper second pass to really get what I need out of it.  It just touches on too many ideas and topics that I know very close to nothing about.  Looking forward to zen’s  incisive distillation.
    .
    The hobbyist in me was constantly looking for a way to quantify the fat-tail / power-law into a workable mechanism for a wargame model.  My tentative conclusion is that Taleb says it’s possible for mild-strain chaos (grey swan), but not for the wild randomness of the black swan.  Please advise if you grok that bit.

  2. vimothy:

    March 11th, 2008 at 3:07 pm

    I’ve just (last night) finished it — it’s a brilliant, exciting book!

    Moon,

    It seems to me that a quantifiable black swan would be a grey swan by definition.

  3. Moon:

    March 11th, 2008 at 3:30 pm

    vimothy, yes I think I backed into that conclusion, as much as I didn’t want to hear it.  ;-\  Still, even if not quantifiable, can you imagine any way to model it qualitatively in the context of a discrete event sim?  i.e. how do you get your model to say that *something* unexpected but very rare happened, even if the quantification is dismissed?

  4. Jay:

    March 11th, 2008 at 8:28 pm

    Definitely looking forward to your take. Like moon, I’m going to have to re-read it (if I ever get it back!) to fully "get it."

  5. Moon:

    March 11th, 2008 at 9:20 pm

    Here’s a Taleb-recommended journal:
    http://journal.sjdm.org/

    soob, my tactic is:  alternate my reservations at two local libraries, so that I am always queued up to get one of the copies.  ;-\  (Or maybe you mean you lent out your own copy and it might not be returned?)  Another option is to check out the 12-disc audio, burn the MP3 tracks, and listen at leisure.

  6. TDL:

    March 11th, 2008 at 9:42 pm

    I thought you all would enjoy the these links:
    First, Taleb on EconTalk.  He discussed his ideas with Russ Roberts.
    http://www.econtalk.org/archives/_featuring/nassim_taleb/index.html

    Second, Taleb’s own site.
    http://www.fooledbyrandomness.com/

    I enjoyed his first (actually second) book and look forward to reading this one, eventually.  Being a former trader I am glad to know that there are intelligent people in finance (although he no longer trades or "runs" money.)  Taleb was very effective in bursting a lot of intellectual models on the Street, too bad he no longer comments on the markets.

    Regards,
    TDL

  7. zen:

    March 12th, 2008 at 1:54 am

    Grazia TDL ! – going to post up soon on another site of yours 😉

  8. TDL:

    March 12th, 2008 at 4:29 pm

    Mark,
       Looking forward to it.  Thanks again.

    Regards,
    TDL

  9. Seerov:

    March 15th, 2008 at 6:21 am

    I own this book but haven’t started reading it yet.  Perhaps you can provide us with a review once you have completed it? 

  10. zen:

    March 15th, 2008 at 3:54 pm

    Definitely.