Nicholas Taleb is an epistemologist/mathematician/philosopher/risk engineering professor who wrote a book called The Black Swan. Nothing unpredictable until now. Mathematicians are prone, statistically speaking, to write books about predictions. Taleb is one of them. Nevertheless, it is what Taleb proposed that is unpredictable. Black Swans are rare events with maximum impact, which, as in the phenomenological world, depend upon the observer: "What may be a surprise, a rare event for a turkey, it is not a rare event for the butcher, or what was a rare event, a black swan, for victims of September 11th was not a black swan for terrorists.”
Taleb says that the triad that governs our lives is composed of rarity, extreme impact, and retrospective predictability. How comes “retrospective”? What kind of predictability is that if there's no perspective? Simply, we do not realize the potential predictability until things happen retrospectively. In other words, after the events of September 11, putting together what we have learnt, made it look easy to predict what happened.
Predictability is the degree to which one can make a prediction or prognosis of a system or condition, thing that can be done quantitatively or qualitatively. In other words, to forecast is to make prophecies based on data collection.
Taleb is convinced that the Gauss Bell, which makes us feel normal (so predictable and banal, even though we all secretly want to get out of it and be exceptions) is "the greatest intellectual fraud as it does not study extreme deviations but focuses on normal, giving us the impression of taming uncertainty. "
But the author argues that both amateur statisticians and other prophets (such as social scientists, psychologists, sociologists, anthropologists, economists, etc.) operate with the false confidence that they can measure the uncertainty, whatever they predict being no more accurate than astrology. Ouch, I know. The author of Lebanese origin (or Levantine, as he likes to call himself) argues that this combination of low predictability and high impact makes out of a black swan an enigma, blinding us in front of the randomness. In this sense, Taleb proposes the following exercise: "take into account the significant events, inventions and technological changes in our environment that have occurred since your birth and compare them with what was expected before their appearance. "
"Is it not strange that an event will take place precisely because it is not expected to take place?" Taleb asks rhetorically. Not exactly, we should be tempted to respond, though he does not expect us to answer, as the exceptions are predictable and we do expect them to happen. We expect that the exceptions and the extremities of Gauss Bell to exist and take place. We expect that a woman over the age of 35 to be more likely to bear a child with Down syndrome. What we do lack indeed is our mental and physical preparation to cope with such rare events. Although Taleb launches an interesting hypothesis, namely "the inability to predict isolated cases implies failure to predict the course of history" it is not necessarily so. We are able to predict the occurrence of isolated cases. The Lebanese Civil War that took place in 1975-1990, which Taleb gives as an example insisting that there was no prerequisite for its appearance, was expected for both Lebanese and the rest of the Arab or European populace. Sure, the war was a false black swan for the Fiji Islanders. I say false because the Lebanese civil war, although a rare event, had a minimal impact on the people of Fiji Islands. The socio-political context of 1975 Lebanon was volatile and tense. One does not have to be a sociologist to realize that when the arm trafficking increases, some 15 religious sects coexist on a small territory of 10.000 sq km, all applied to a society with a highly flammable temperament is almost self-understood that a conflict will not delay to appear. .
If you are still not convinced that whatever happens cannot be subjected to predictability, and that we are victims of randomness, then let's do the exercise that Taleb proposed: "Examine your own life, choosing a profession, meeting your partner, the origin of your country exile, the betrayals that you have suffered or the sudden enrichment or impoverishment. Whenever these things adhered to a plan? ". Not many times, right?
Frankly, the equation above equaled for me in a result with many decimals and a bunch of X factors, currently being the outcome of irrational and unexpected choices rather than of calculated and rational ones.
Although we like to think we are rational and act on the basis of calculations dominated by Nash equilibrium (a player who has no advantage is the one who changes strategy) and zero-sum game (that game where the sum is zero earnings) both Taleb’s and Ariely’s conclusion, his Israeli neighbor, is that we are deeply chaotic and irrational animals. One of the highlights of our irrationality is altruism. However, evolutionary psychologists argue that we our altruism is nothing more than kin reciprocity and, by extension, the aid we offer to a complete stranger is ordered by out archaic brain, which lies to us by saying that stranger could be a member of our tribe.
Nash equilibrium, underlined by the Coward Paradox, can be seen in action in the film Rebel without a Cause, where two vehicles drive toward each other in full speed. Whoever steers the wheel (the coward) first, loses. The principle is to create enough pressure, until someone fails.
OK, if we are rational and predictable beings, we can calculate which of the two people will give up and will steer the wheel. Sure, with a margin of error, knowing the history of the two, their physical, mental and socio-cultural context, we can predict who is more likely to pull the wheel, saving his life and being, paradoxically, a loser. On the other hand, ironically enough, the irrational one that does not pull the wheel, and who blindly throws himself into a possible collision, does some sort of calculation of benefits minus costs, and by acting that way he increases his status that comes with the "courageous” label. Sometimes bluffing works. Therefore, the irrational individual, who is willing to risk his life (in a stupid way, we might add), makes his calculation, maybe not at the conscious level, and he is the one that ends up with an increased status. Isn’t irrationality beneficial after all? If irrationality weren’t good for us, we would have gotten rid of it like we got rid of the claws and fur.
People are a shallow and dishonest race, says Taleb, besides being irrational, add Dan Ariely, Kahneman and Tversky, who proposed that our judgments are based on uncertainty (alternatives with uncertain results) and probabilities.
The emergence of a black swan does not invalidate the hypothesis that all swans are white, although with Karl Popper in mind we might say that's enough to have just one black swan to falsify the idea that all swans are white. However, not all statements that are falsifiable in principle are falsifiable in practice, such as "it will rain here in a million years" is theoretically falsifiable, but not practically. Imre Lakatos, a Hungarian philosopher, rejected the perspective of naïve falsificationism, according to which all theories must be rejected in their totality, if they are falsified, meaning infirmed by empirical and experimental results. However, naïve falsification does not supply a way of handling competing hypotheses for instance conspiracy theories and urban legends. People arguing that there is no support for such an observation may argue that the differences are too small to be statistically significant. Therefore, naïve falsification does not enable scientists, who rely on objective criteria, to present a definitive falsification of universal statements.
Taleb seems an extremist epistemologist: he cannot stand the Gauss Bell, the statisticians, the scientists who are looking for theories just to fool themselves, and our impulse to focus on what seems logical. But in a world proposed by Taleb, where we are like the yellow leaves of the branch barely hanging in the wind of uncertainty, how much can we maintain our mental health?
The ordinary human being behaves like a scientist and this is how he acts best in the world: he forms a prediction system which reduces his level of anxiety. We use the statistics that give us a calculated lie and along with it the peace of mind that we ourselves are not the exceptions, but the average. When we take the plane, we say that, statistically speaking is the safest means of transport, being more likely to die in a car accident in the city or in a domestic accident, slipping in the shower, rather than in a plane crash. However, still statistically speaking, in a car accident, you have more chance of survival than in a plane crash.
Taleb does not insist that we should try to predict a rare event, which is impossible, but to build robustness in front of the negative black swans and exploit the positive black swans as much as we can.
Ariely has studied this very issue (of irrationality which is, from his point of view, totally predictable) and concluded that people have one defining feature- emotion based irrationality. Ariely has proposed an experiment, which shows that fully grown men are lost and forget what is rational, in certain circumstances. Namely, he asked the subjects to answer questions in a state of calmness, then answer the same questions while being sexually aroused, dominated by emotion, while masturbating. Obviously, the outcome was predictable. No matter how lucid, informed and rational seemed the subjects in a non-aroused state, the more they become irrational and took the worst decision while being aroused. Thus, people who knew they should not have unprotected sex, who believed that cannot possibly be attracted to 12 year old girls, or believed they would never have sex with another man or animal, or seemed repulsed to the idea of an urinating woman, or felt they did not like to have their ass slapped while having sex, have radically changed their choices when the decisions were taken under the sway of emotion.
Suddenly, all their choices of rational, moral and informed people, went down the drain and most said they were ready to have sex with men, animals, fat women, 12 year old girls, people they hated, that they would drug or get drunk their partner to have sex with her, or that would have sex with someone even if she said no, that would not use condoms if they were too excited, even if they did not know the sexual history of their partner and are aware of the HIV/AIDS dangers. What does this experiment tell us about ourselves? That our choices are not rational, that we are not rational human beings, and that the situations when we make take decisions are not ideal and we are not fully informed individuals; the impressions we formed about ourselves are way too good and way too wrong; that we have many convictions which we should not have; that our will can be broken at any time and that our power to decide does not lay in the rapidity we concoct logical inferences but in our limbic system. Pretty predictable, no?
