The Role and Nature of High Impact Events (Black Swans): Technical Commentary and Empirical Data - Written by N. N. Taleb This is an appendix to the Edge piece. It is striking how some simple, simple tests (of stability of the 4th moment and failures of stress testing) can invalidate tens of thousand of research papers [...]
Ten principles for a Black Swan-proof world
April 13, 2009 By 2 Comments
1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest. 2. No socialisation of losses and privatisation of gains. Whatever may need to be [...]
The Black Swans…
April 10, 2009 By Leave a Comment
(This is the canonical black swan definition from the canonical “black swan” guy.) Dispatches from Extremistan (Nassim Taleb talk) 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 [...]
