This post of mine is to present summary of the great book I just read. It is the 'The Black Swan' by Nassim Nicholas Taleb. The book deals with the impact of the highly improbable. I am presenting here the contents which I could grasp and I must clarify that the greatness of the concepts have been limited by my dim intellect.
1) The predictions and history - The author points out that we as human always try and make sense of the events after it has happened even though the event may be a black swan or a highly improbable event. Before the discovery of
2) Scalable and the Non scalable - The activities and knowledge domains in our world can be categorized into scalable and non scalable elements. The author calls them Medocristan and Extremistan. Take example of wealth it is a scalable element where a single person can have billions of dollars whereas even a group of 1000 persons may just have few thousand dollars. However if we take average height of a person it we be more or less hovering around the average. So the former belongs to extremistan and later belongs to the medocristan. The black swan tends to occur in extremistan. Economics and Business are scalable elements thus are prone to black swan effect. The success of Windows and Google are black swans which no one can predict.
3) Confirmation and evidence - There is a big difference between 'Absence of proof' and 'Proof of absence'. Suppose I meet a person everyday and I know he is very humble and decent but he is convicted of killing his wife. I cannot say that he has not killed his wife just because I have not seen it. My absence during the murder just makes it' absence of proof' for me but in no way it is 'proof of absence'. Consider a 'Chicken' inside a cage and it finds that a human feeds it everyday so for 1000 days the human is the best possible being on this planet but on the 1001st day the chicken is on the dinner table. All the inferences drawn during first 1000 days were proven wrong on the 1001st day. So the absence of proof for the first 1000 days did not made it proof of absence.
4) Narrative fallacy - The author is of view that our mind is wired to draw conclusions from events. We tend to reduce complexity and dimensions of matter to make it more easy for us to comprehend to give every event a logical explanation. He calls it Narrative fallacy or cause trap. We have to invent cause for everything that has happened we just can not take it as a random event. We all suffer from this theorizing disease and this make the world seem less random than it really is.
5) The problem of silent evidence - Cicero the great roman thinker presented the following story where a man named Diagoras a non beliver was shown clay potraits of some persons who prayed and survived a shipwreck. The implication was that praying protects from drowning. Diagoras asked where the pictures of those who prayed and then drowned . The drowned worshippers being dead would have lot of trouble advertising their experiences from the bottom of the sea. This can fool the observers to believe in miracles. This is called the problem of silent evidence. Our bookstalls are filled with business books which will tell you what their author did to succeed. There will not a single book by some one who did exactly the same and still failed. Readers would not pay $$ for a story of a failure even if you convinced that it had more useful tricks than a story of success.
6) We just can't predict - Most of the technologies which have revolutionalized our lives were unpredictable - computers, internet ,laser were invented long before they actually showed any impact on the world. We as humans have no tools to predict outcomes in random world of extremistan. The author find it scandalous that in spite of the empirical record we continue to project into future using tools and methods that exclude rare events.
When Missing train is painless - Missing a train is painful only when you run after it . Like wise not matching the idea of success other expects from you is only painful if that's what you are seeking. Thus the aim in black swan terms is that you are exposed to the improbable only when you let it control you. It is very difficult to be a loser in the game you set up yourself. However the author concludes that all this philosophy, all the problems and scary losses are small when compared to our own existence. We are quick to forget that just being alive is an extraordinary piece of good luck a remote event, a chance occurrence of monstrous proportions. Don't be ingrate who got a castle as a present and worried about the mildew in the bathroom. We must remember that we all ourselves are Black Swans.
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