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Ludic Fallacy
Ludic Fallacy
The ludic fallacy, proposed by Nassim Nicholas Taleb in his book The Black Swan (2007), is "the misuse
of games to model real-life situations".[1] Taleb explains the fallacy as "basing studies of chance on the
narrow world of games and dice".[2] The adjective ludic originates from the Latin noun ludus, meaning
"play, game, sport, pastime".[3]
Description
The fallacy is a central argument in the book and a rebuttal of the predictive mathematical models used to
predict the future – as well as an attack on the idea of applying naïve and simplified statistical models in
complex domains. According to Taleb, statistics is applicable only in some domains, for instance casinos in
which the odds are visible and defined. Taleb's argument centers on the idea that predictive models are
based on platonified forms, gravitating towards mathematical purity and failing to take various aspects into
account:
Examples
One example given in the book is the following thought experiment. Two people are involved:
A third party asks them to "assume that a coin is fair, i.e., has an equal probability of coming up heads or
tails when flipped. I flip it ninety-nine times and get heads each time. What are the odds of my getting tails
on my next throw?"
Dr. John says that the odds are not affected by the previous outcomes so the odds must still
be 50:50.
Fat Tony says that the odds of the coin coming up heads 99 times in a row are so low that
the initial assumption that the coin had a 50:50 chance of coming up heads is most likely
incorrect. "The coin gotta be loaded. It can't be a fair game."
The ludic fallacy here is to assume that in real life the rules from the purely hypothetical model (where Dr.
John is correct) apply. A reasonable person, for example, would not bet on red on a roulette table that has
come up black 26 times in a row (especially as the reward for a correct guess is so low when compared
with the probable odds that the game is fixed).
In classical terms, statistically significant events, i.e. unlikely events, should make one question one's model
assumptions. In Bayesian statistics, this can be modelled by using a prior distribution for one's assumptions
on the fairness of the coin, then Bayesian inference to update this distribution. This idea is modelled in the
Beta distribution.
Example: Fighting
Nassim Taleb shares an example that comes from his friend and trading partner, Mark Spitznagel. "A
martial version of the ludic fallacy: organized competitive fighting trains the athlete to focus on the game
and, in order not to dissipate his concentration, to ignore the possibility of what is not specifically allowed
by the rules, such as kicks to the groin, a surprise knife, et cetera. So those who win the gold medal might
be precisely those who will be most vulnerable in real life."[2]
Relation to platonicity
The ludic fallacy is a specific case of the more general problem of platonicity, defined by Nassim Taleb as:
the focus on those pure, well-defined, and easily discernible objects like triangles, or more
social notions like friendship or love, at the cost of ignoring those objects of seemingly messier
and less tractable structures.[4]
See also
List of fallacies
Congruence bias
Cromwell's Rule
Déformation professionnelle
Demarcation problem
Focusing effect
Laplace's demon
Hindsight bias
Unexpected hanging paradox
Map-territory relation
Quasi-empiricism in mathematics
Wicked problem
Kouska's fallacy
References
1. Sicart, François (26 February 2007). "Black Swans, the Ludic Fallacy and Wealth
Management" (https://web.archive.org/web/20071223090355/http://www.tocqueville.com/arti
cle/show/204). Tocqueville. Archived from the original (http://www.tocqueville.com/article/sho
w/204) on 2007-12-23.
2. Taleb, Nassim (2007). The Black Swan. New York: Random House. p. 309. ISBN 1-4000-
6351-5.
3. Simpson, D.P. (1987). Cassell's Latin and English Dictionary. New York: Hungry Minds. p.
134.
4. "Tales of the Unexpected" (https://web.archive.org/web/20110928152525/http://www.fooledb
yrandomness.com/0603_coverstory.pdf) (PDF). Wilmott Magazine: 30–36. January 2006.
Archived from the original (http://www.fooledbyrandomness.com/0603_coverstory.pdf) (PDF)
on 28 September 2011. Retrieved 18 October 2013.
External links