[tt] [SALT] Dispatches from Extremistan (Nassim Taleb talk)

[Eugen Leitl]

----- Forwarded message from Stewart Brand <sb at gbn.org> -----

From: Stewart Brand <sb at gbn.org>
Date: Tue, 5 Feb 2008 12:33:15 -0800
To: salt at list.longnow.org
Subject: [SALT] Dispatches from Extremistan (Nassim Taleb talk)
Reply-To: services at longnow.org


   A "black swan," Taleb explained, is an event which is 1) Hard to
   predict; 2) Highly consequential; 3) Wrongly retro-predicted.  We
   pretend we know why the big event happened, and so entrench our
   inability to deal with the next world-changing improbable event.

   Examples: Viagra, 9/11, Harry Potter, First World War, Beatles, the
   PC, Google, and the rise of any successful religion.  History is
   dominated by sudden, lasting changes wrought by deeply unexpected
   events.

   Part of the problem is that we ignore the "silent evidence" of the
   nonobserved and nonobservable.  We compute probability from the
   success of survivors.  No one writes or reads a book titled "How I
   Lost a Million Dollars."  Another problem is that we revise our own
   predictions and intentions unconsciously to match what actually
   happens.  We disguise having been wrong by pretending we were right.
   This is "confirmation bias."

   There are TWO kinds of randomness, two realms in which events
   happen...

   Mediocristan is dominated by the average--- one new observation won't
   change much.  If you are measuring the weight of a large sample of
   humans, adding the heaviest person in the world won't change the
   result, whereas measuring the average wealth of a large sample of
   humans would be transformed by adding the wealthiest person.
   Mediocristan is the realm of the Law of Large Numbers and of the
   Gaussian Bell Curve.

   Extremistan is dominated by extremes.  Every year 16,000 books are
   published in English.  A handful of best-sellers absolutely dominate.
   This is the realm of the power-law curve and the Long Tail.
   Extremistant defies prediction.  You can say there will be a few
   monsters and lots of midgets and the world will be changed by the
   monsters, and that's all you can say.

   Benoit Mandelbrot convinced Taleb that the main dynamic of
   Mediocristan is energy, and the main dynamic of Extremistan is
   information.  Anything social is Extremistan.

   Thus there are two kinds of experts.  A soufflé chef really is an
   expert and can be trusted.  An economist is a pseudo-expert.  "Never
   take advice from someone wearing a tie."  All you get from a Council
   of Economic Advisors is an illusion of control.  Stock market analysts
   have proved to be worse than nothing.

   Don't focus on probability.  Focus on consequences.  Black Swans will
   come.  Prepare against the negative ones; be ready to soar with the
   positive ones.

   Pay attentive heed to tradition and old people--- they have
   experienced more Black Swans.

                                           --Stewart Brand

   PS...  All of the SALT speakers perform for free.  Taleb added the
   further generosity of insisting on paying for his travel and lodging.
   Extra thanks to him for that.

--

   Stewart Brand -- sb at gbn.org

   The Long Now Foundation - http://www.longnow.org
   Seminars & downloads: http://www.longnow.org/projects/seminars/

----- End forwarded message -----
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Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org
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