The book Fooled by Randomness is not new. But, since Denise and I discussed randomness, I thought it would be nice to give a quick recap of the book, in order to the discussion up to speed. The key message in the book comes down to this. ‘Randomness plays a bigger part in our lives then we would like to acknowledge‘. If you read the book you’ll often smile (or not…, if your on the receiving end of his fury). Taleb constantly pounds on self deceit, half truths, sloppy reasoning, prejudice and limited knowledge on the part of humans. What often looks like skill is often plain old luck.
Taleb describes the overconfidence of many “experts.” Some people have a motivation to display certainty. For example, auto mechanics always seemed to me to be 100% sure of their diagnosis (“It’s the electrical system”), then when they were wrong, it never would bother them a bit. Setting aside possible fradulence, I think they have a motivation to be certain, because we’re unlikely to follow their advice if they qualify it. In the other direction, academics like me perhaps have a motivation to overstate uncertainty, to avoid the potential loss in reputation from saying something stupid. But in practice, people seem to understate our uncertainty most of the time. Andrew Gelman, 2006
The key thoughts in the book
- Since we can’t control unpredictable events, we should accept uncertainty and seek to maximize our exposure to serendipity, as by putting ourselves in the way of new ideas.
- Since there is such danger in accepting conclusions based on too little information simply because they confirm our beliefs, we should try to remain aware in the present of what we are doing, paying attention to what actually happens and refraining as far as possible from imposing theories on our experience.
- We should recognize our poor record as a species in predicting the future, that we are much better at doing than knowing. Some things are more predictable than others: we are safe enough in expecting tomorrow’s sunrise to plan on breakfast. We can start noticing which situations are most susceptible to black swans, and when we encounter them, remember how little we truly know so our ignorance doesn’t lead us around by the nose.
© 2005 My new crush, Arlene Goldbard
Considering the fact that Taleb blatantly argues that many who consider themselves the rulers of the universe were in fact a group of lucky fools, it is inevitable that many will come away from it with a sense of anger and a refusal to believe it. I am therefore almost surprised that the book has not drawn harsher reviews than it has, for Taleb was certainly not seeking to make friends through the publication of it. I suspect that those who rate the book as poor fall into two general categories: those who were troubled by the thought that a considerable portion of their success may have resulted from luck, and those who are attached to their current views on the workings of the markets and are hostile to any new views on them. These two categories naturally overlap quite often. An important thing to remember is that even if you work very hard, not only are the outcomes of your projects the result, to varying extents, of chance, but chance also played a role in getting you to the position where you can work hard and actaully see it pay off. Considering the complexity of the world we live in, and the infinite forces that push and pull on our lives, this book is critical to anyone who desires an objective veiw of how things come to be…(anonymous reader review on Amazon.com)
Relevant websites
