For those who care about probability, Fat Tails in 3D: Instead of a bell curve with higher peak we see density of points in space towards the center.
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SILENT RISK.
Friends, I finally settled on the title that explains maximally what the work is about. Subtitle: Lectures on Fat Tails, AntiFragility and Asymmetric Exposures. The only term that is negotiable is “Lectures” replaced by “Treatise”.
Thanks for the opinion.The link is here: http://www.fooledbyrandomness.com/FatTails.html
THE INVERSE CONSEQUENCE. Friends, how prevalent is this situation beyond unintended consequences, by which where one gets the opposite effect than intended. (Of course people are blind to the phenomenon).
Consider the simple case of colonization, where the aim is to take a territory, rule its native population and implant your own as permanent settlers. But in many countries we get the opposite population movement: not only the settlers are now near-completely gone but it is the native populations who became permanent settlers in the conqueror’s home. France took Algeria, hoping for a country to eat cassoulet and instead it is France that is eating couscous, etc., something that would have horrified the planners of the original invasion.
With mergers and acquisitions there was a saying that the acquiring company (agressor) is often taken over by the personnel of the acquired one (I saw it live: Phibro bought Salomon brothers, and Phibro executives were fired, etc.) In finance if you lend to someone you think you will own him but in fact the borrower will end up calling the shots.
I wonder how prevalent this is. Please list your example/anecdote.
via THE INVERSE CONSEQUENCE. Friends, how… – Nassim Nicholas Taleb | Facebook.
THE LEBANESE WAR THAT DOESN”T HAPPEN. Please show this your Lebanese friends who are scared to come visit their families in Lebanon.
The casualty rate from bombs in Lebanon over 2013 was ~2.5 per 100,000 people. It remains < a tenth of crime in NY in the 90s, <20th of crime in Brazil, etc. Outside bombs the homicide rate is very low.
Why?
Simply, a bomb is immediately noticed by the press, series of isolated crimes don’t make the newspaper. Antony Veich wrote: “in the case of Belfast the press usually stayed at The Europa, so the IRA took the bombs to the hotel… 28 times.” Sadly, people in 2014 make more irrational decisions than they did in 1900.
Visible risks are not really risks.
The other good news is that everyone is worried about “future risks”. The risks in Lebanon are not hidden. They are open for everyone to see, and nobody is wondering why in spite of all these incidents the war DID NOT happen? Every bomb that does not cause generalized warfare makes the system more robust to war (see Antifragility).
In 1975 the Palestinians had nothing to lose from civil war. Same with Syria. Today all parties have skin in the game, and are deep into real estate in Beirut
via THE LEBANESE WAR THAT DOESN”T HAPPEN…. – Nassim Nicholas Taleb | Facebook.
THE IDIOT IN REAL LIFE PROBLEM. 15 years ago I noticed that people who studied economics were very stupid in casual inference violating probability theory but would not do so in the classroom. Then I noticed that two economists just made absurd statements about one of my “prediction”, particularly one Noah Smith who normally should know better. How could that be? Simple: different domains.
There have been papers (mine with Goldstein plus Hoggarth and Sayer) documenting this: you simply can’t trust a nonpractioner of probability to discuss probability in the real world.
