If you like the notes, go ahead and buy the book!
- The book is about rare and impactfull events, which we to often ignore but those event in fact create the world around us.
- It is a part of "Incerto" (many ideas overlap with his other books).
The main idea is that we can't and we shouldn't assign probabilities to rare and impactful events. What we can do is to be prepared for them in order to make them less painful or in case of positive blank swans, be ready to use new opportunities.
From hayek economic theory summary:
Economist Friedrich Hayek argued that a dynamical system like the economy was simply too complex for a single entity to master. This was in contrast to the prevailing rational choice theory.
Hayek recognized a stark distinction between soft sciences like economics and hard sciences like physics. This distinction was part of Hayek’s economic theory.
Wrong map is better than no map
Wrong. Sometimes it is better not to go anywhere.
Black Swan must be the same for all observers
Wrong. It is relative.
We can predict particular black swan events
Nope. Those are the events, we can't predict (it is their definition).
Using non-gaussian distribution can help to avoid black swan events
Wrong. It just makes people more conscious about their existence.
Performing metrics on probability
Be careful. Effects are non-linear, so our values might not mean anything.
Trying to categorize and distinguish types of probability
It doesn't have any difference in real life.
Never make any predictions
Wrong. Just be aware of your domain.
- Grey swans
- Fractal randomness
- Mandelbrot