HatTip to Dave Lull

117– Postscript to The Black Swan (second edition, paperback inUS): Where I Lose All Inhibitions and State That It Is The MostRelevant Problem in the History of Thought

Until The Black Swan (and associated papers) most of epistemology and decision theory were just sterile mind-games and foreplay.  I am going to be blunt. The Black Swan (hence TBS)  is the very first attempt in the history of ideas to provide a map in the darkness,  to set systematic limits to the fragility of knowledge, and set boundaries to where such knowledge becomes fragile and consequentially so –where the map no longer works. And it is the very first time a real effective, prescriptive, and, to call it by its name, vulgarly practical,solution to the consequential problem has been provided.

Furthermore, to be more aggressive, while limits like those attributed to Gödel bear massive philosophical consequences, but we can’t do much about them, I believe that the limits to empirical and statistical knowledge I have shown have both sensible (if not vital) importance and we can do a lot with them in terms of solutions, by categorizing decisions based on the severity of the potential estimation error of the pair probability times consequence –with the Fourth Quadrant approach.

I

The most consequential problem I know in the history of human thought, ever since we’ve had attempts to formulate thought, is finding one’s position on the boundary between skepticism and gullibility, or  how to believe and how to not believe. And how to make decisions based on these beliefs –beliefs without decisions are just sterile. So  this is not an epistemological problem (i.e., focusing on what is true or false); it is one of decision, action, and commitment.

Clearly, you cannot doubt everything and function; you cannot believe everything and survive.  Yet the philosophical treatment of the problem has been highly incomplete, and, worse, has not improved much throughout the centuries. One class of thinkers,say the Cartesians, or the academic skeptics, some eighteen centuries before them, in their own way, started with the rejection of everything upfront, with some even more radical like the Pyrrhonians rejecting so much that they even reject skepticism as too dogmatic in their opinion. The other class, say the Medieval scholastics, or the modern day pragmatists, start with the fixation of beliefs, or some beliefs.  While the medieval thinkers stop there, in an Aristotelian way, the early pragmatists, with the great thinker Charles Sanders Peirce, provided a ray of hope. They proposed to update and correct beliefs as a continuous work in progress.  They view knowledge as mere interplay between anti-skepticism and fallibilism, i.e., between the two categories of what to doubt and what to accept. The application to my field, probability, and perhaps the most sophisticated version of such program, lies in the dense, difficult, deep, and brilliant forays of  Isaac Levi into decision theory with the notion of doxastic commitment, degrees of credence, as probabilities as credal states.

Ray of hope perhaps, but still not even close.

Think of living in a three dimensional space while under the illusion of being in two dimensions. Of course, you will not be awareof the truncation –and will be confronted with many mysteries,mysteries that you cannot possibly clear up without adding ad imension. And of course you will feel helpless at times. Such was the fate of knowledge all these centuries; by focusing on True/False distinction in epistemology, it remained with very few exceptions,prisoner of an inconsequential, and highly incomplete, 2-D framework. The third missing dimension is, of course, the consequence of the True, and the severity of the False. In other words, the payoff from decisions, the impact, and magnitude of the result of such a decision. Sometimes one could be wrong and it may turn out to be inconsequential. Or one could be right, say, on such a subject as the sex of Angels, and it may turn out to be completely inconsequential.

Once you start examining the payoff, the result of decisions, you will see clearly that some  may be benign, some may be severe.And you pretty much know which one is which beforehand. You know which errors are consequential and which ones are not.

II

I will provide a short exposition of the first result of my work:knowledge degrades markedly with small probabilities; theories fail most with low probability events; some domains (easy to identify beforehand) are more vulnerable to such events. Hence theoretical and model error are more consequential in the tails and some representations are more fragile than others.

III

What to do about is as follows. When you look at the generator o fthe events, you can tell which environment can deliver large events (Extremistan) and which environment cannot deliver them (Mediocristan).

So that’s that. You know that there are:

I- Situations in which errors and opportunities are inconsequential

and

II- Situations sensitive to extreme errors or extreme favorable outcomes

and which

a- Event generators belong to Mediocristan (i.e., it is close to impossible for very large deviations to take place)

b- Event generators belong to Extremistan (i.e., very large deviations are likely)

(Luckily the distinction between the two is easy to establish a priori).

So clearly your doubts and verbose worries are inconsequential inI-a, I-b, and II-a. You need to focus on avoiding II-b, which I call the Fourth Quadrant.

The Fourth Quadrant, II-b, is where our knowledge is fragile,where it could bite us, and where mistakes can have monstrous consequences.  And the good news is that we can robustif yourselves against the induced fragility.