spent 36 weeks on the
New York Times
The second, expanded edition appeared in2010.
Overview: Black Swan theory
Taleb, bestselling author of
Fooled by Randomness
, treatsuncertaintyandrandomnessas a single idea. SeeBlack swan theoryfor Taleb's
definition of a Black Swan Event.
Since being published in 2007, as of February 2011 has sold close to 3 million copies. Itspent 36 weeks on the
New York Times Bestseller listlist; 17 as hardcover and 19 weeks
aspaperback. It was published in 32 languages.
Coping with black swan events
The main idea in Taleb's book is not to attempt to predict Black Swan Events, but to buildrobustnessto negative ones that occur and being able to exploit positive ones. Taleb contends thatbanks and trading firms are very vulnerable to hazardous Black Swan Events and are exposed tolosses beyond those that are predicted by their defective financial models. The book's position isthat a Black Swan Event depends on the observer—using a simple example, what may be a Black Swan surprise for a turkey is not a Black Swan surprise for its butcher—hence the objective shouldbe to "avoid being the turkey" by identifying areas of vulnerability in order to "turn the Black Swans white".
Nassim Nicholas Talebrefers to the book variously as an essay or a narrative withone single idea:
"our blindness with respect to randomness, particularly large deviations."
It isTaleb's questioning of why this occurs and his explanations of it that drive the book forward. Thebook's layout follows "a simple logic"
moving from literary subjects in the beginning to scientificand mathematical subjects in the later portions. Part One and the beginning of Part Two delve intoPsychology. Taleb addresses science and business in the latter half of Part Two and Part Three. PartFour contains advice on how to approach the world in the face of uncertainty and still enjoy life.Taleb acknowledges a contradiction in the book. He uses an exact metaphor,Black Swan Ideatoargue against the "unknown, the abstract, and imprecise uncertain—white ravens, pink elephants, orevaporating denizens of a remote planet orbiting Tau Ceti." There is a contradiction; this book is astory, and I prefer to use stories and vignettes to illustrate our gullibility about stories and ourpreference for the dangerous compression of narratives.... You need a story to displace a story.Metaphors and stories are far more potent (alas) than ideas; they are also easier to remember andmore fun to read.
Part one: Umberto Eco's anti-library, or how we seek validation
In the first chapter, theblack swan theoryfirst is discussed in relation to Taleb's coming of age in theLevant. The author
then elucidates his approach to historical analysis. He describes history as opaque, essentially ablack box of cause and effect. One sees events go in and events go out, but one has no way of determining which produced what effect. Taleb argues this is due to
The Triplet of Opacity
In the second chapter, Taleb discusses a neuroscientist named Yevgenia Nikolayevna Krasnova andher book
A Story of Recursion
. She published her book on the web and was discovered by a smallpublishing company; they published her unedited work and the book became an internationalbestseller. The small publishing firm became a big corporation, and Yevgenia became famous. Thisincident is described as a Black Swan Event. Taleb goes on to admit that the so-called author is awork of fiction. Yevgenia rejects the distinction between fiction and nonfiction. She also hates thevery idea of enforcing things into well defined "categories", holding that the world generally iscomplex and not easy to define. Though female, the character is based, in part, autobiographicallyon the author (according to Taleb), who has many of the same traits. In the third chapter, Talebintroduces the concepts of
. He uses them as guides to define howpredictable is the environment one's studying.
environments safely can useGaussiandistribution. In
environments, a Gaussian distribution is used at one's peril. Chapterfour brings together the topics discussed earlier in the narrative, about a turkey. Taleb uses it to