.org (UNOFFICIAL news site)
Nassim has just completed a AMA (Ask Me Anything) on Reddit.com
I am interested in decision making under opacity (when we don’t know what’s going on) without being harmed by mistakes, disorder, and volatility, and be potentially helped by them. Antifragility at the gobal level is achieved through the skin in the game rule: people should be harmed by their mistakes if these harm others. At the personal (local) level… let’s discuss. Home Page (Verified on twitter @nntaleb)
Nassim Taleb’s response to Michael Shermer’s review of Antifragile in the science journal Nature:
In his review of my book Antifragile, Michael Shermer mischaracterizes the concept of ‘antifragility’ (Nature491, 523; 2012).
‘Fragility’ can be defined as an accelerating sensitivity to a harmful stressor: this response plots as a concave curve and mathematically culminates in more harm than benefit from random events. ‘Antifragility’ is the opposite, producing a convex response that leads to more benefit than harm.
We do not need to know the history and statistics of an item to measure its fragility or antifragility, or to be able to predict rare and random (‘black swan’) events. All we need is to be able to assess whether the item is accelerating towards harm or benefit. The relation of fragility, convexity and sensitivity to disorder is thus mathematical (N.N. Taleb and R. Douady Quant. Finance, in the press) and not derived from empirical data,
as Shermer implies.Shermer’s suggestion that I should offer “a checklist of things companies or countries can do to prepare for black-swan events” overlooks 50 or so such heuristics based on the identification of convex responses.
Nassim N. Taleb Polytechnic
Institute of New York University,
New York, USA.
PDF Link: http:// www. fooled by randomness. com/ nature-definition. pdf
Link on Nature.com: http:// www. nature. com/ nature/ journal/ v494/ n7438/ full/ 494430e. html
Michael Shermer’s Review: http:// www. nature. com/ nature/ journal/ v491/ n7425/ full/ 491523a.html
Nassim Nicholas Taleb wrote a book called ‘The Black Swan’ which was about randomness and the inevitability of improbable, unpredictable but hugely disruptive events like the banking crash of 2008. Taleb, a derivatives trader, made a great deal of money out of that and other crashes by prudently investing on the assumption that something would go wrong even though nobody knew what that was. He talks about his follow-up book called ‘Anti-fragile: How to live in a world we don’t understand’
(Taleb)
“Once you define fragility as one who does not like volatility and variability, and for statistical reasons you can, then the exact opposite is something that loves volatility, gains from disorder, variability, stresses and similar phenomena. This category of object doesn’t have a name, it is not resilient, it is not robust, it is something beyond. A lot of things require disorder and variability to function [Beautiful]. And of course we are harming by depriving them of disorder and variability”.[Systems that appear to be robust, like the banking system, are in fact fragile?]
“Exactly. There are systems where the errors are small and systems where the errors are large. In a transport system, an accident lowers the probability of another accident. We never let an error go to waste. On the other hand the banking system, the failure of a bank makes the next bank failure more likely. It is not a healthy system”.
[In a world of big top-down organisations it is very difficult to organize?]
“It is actually simple. You can come up with single rules. The big thing for me is to transfer fragility from the individual to the system. Skin in the game. You get harmed by your mistake. A bureaucrat in Whitehall is not harmed, but if you live in a village you feel you’ve made a mistake. You have this kind of shame checking you. Decentralisation is a must. Mathematically I show how size compounds mistakes.” [Amazing]
From Nassim Taleb’s Facebook Page …
Friends, the new project: a linear TEXTBOOK on risk and (anti)fragility. I am putting all the relevant technical papers in linear textbook form. To bust current econometrics and similar frauds, and suggest replacement I need to put it in a complete technical textbook-style format targeted at the new generation of students in statistics (econometrics), risk, and social science.
The document will be freely available electronically. I think it will come out at the same time as the U.K. AF paperback in June.
Will post chapters here.
The video is now out of the NYPL talk between Nassim and Daniel (audio version posted here).
Stop in on Tuesday, February 26th at 7pm for Nassim Taleb’s book party for Antifragile.
536 West 112th Street
Between Broadway and Amsterdam
New York, NY 10025-1601
Phone – 212-865-1588 Fax – 212-865-2749
[email protected]
Event link: http:// site. booksite. com/ 6665/ events/?& list=EVC1& group=current& preview=1
Facebook Discussion: https:// www. facebook. com/ permalink.php? story_fbid= 214165742061434& id=13012333374
Here is what I wrote in my endorsement: Emanuel Derman has written my kind of a book, an elegant combination of memoir, confession, and essay on ethics, philosophy of science and professional practice. He convincingly establishes the difference between model and theory and shows why attempts to model financial markets can never be genuinely scientific. It vindicates those of us who hold that financial modeling is neither practical nor scientific. Exceedingly readable.
From the remarks here, people seem to be blaming Derman for not having written the type of books they usually read… They are blaming him for being original! This is very philistinic. This book is a personal essay; if you don’t like it, don’t read it, there is no need to blame the author for not delivering your regular science reporting. Why don’t you go blame Montaigne for discussing his personal habits in the middle of a meditation on war inspired by Plutarch?
From Nassim Taleb’s Facebook Page:
Friends, comments are invited for this draft on a philosophy paper w/ Constantine Sandis, “ETHICS AND ASYMMETRY: SKIN IN THE GAME AS A REQUIRED HEURISTIC FOR ACTING UNDER UNCERTAINTY
C. Sandis & N.N. Taleb
Abstract: We propose a global and mandatory heuristic that anyone involved in an action that can possibly generate harm for others, even probabilistically, should be required to be exposed to some damage, regardless of context. We link the rule to various philosophical approaches to ethics and moral luck.
Link to Paper: http://www. fooled by randomness. com/ SandisTaleb.pdf
Link to Facebook Discussion: https://www. facebook. com/ permalink.php? story_fbid= 515541175165176&id=13012333374
We’re more fooled by noise than ever before, and it’s because of a nasty phenomenon called “big data.” With big data, researchers have brought cherry-picking to an industrial level.
Modernity provides too many variables, but too little data per variable. So the spurious relationships grow much, much faster than real information.
In other words: Big data may mean more information, but it also means more false information.
Link: Beware the Big Errors of ‘Big Data’
http:// www. wired. com/ opinion/ 2013/ 02/ big- data- means- big-errors- people/