taleb

Nassim Taleb’s Program

In August I attended Nassim Taleb’s 2-week program on topics such as: Antifragility, Decision Making, Risk Taking, Black Swan, Skin in the Game, and many more. I’ve always been a big fan of his work because I believe he is one of the most thought provoking authors ever. His books are extremely useful to help you think better and understand the world around you.

Here are 5 of the most interesting concepts from Taleb:

1. Antifragile: the opposite of fragile is not robust, is antifragile – something that has more upside than downside from random events (or certain shocks). Antifragile systems need stressors to be healthy and they are never over-optimized, as optimization is fragile (e.g. globalization, complexity and increased connectedness makes our current world much more fragile). [learn more]

2. Skin in the Game: the principle that if you have the rewards, you must also get some of the risks, not let others pay the price of your mistakes. Avoid taking advice from someone who gives advice for a living, unless they bear a penalty should the advice be wrong. There is no evolution without skin in the game (e.g. there are no bad pilots). [learn more]

3. Via Negativa – Addition by Substraction: the principle that “we know what is wrong with more clarity than what is right, and that knowledge grows by subtraction. Also, it is easier to know that something is wrong than to find the fix”. Subtracting things is usually more effective than adding something to our lives (e.g. not eating – fasting – is healthier for your body than eating bad food). [learn more]

4. Mediocristan (e.g. height of people) vs. Extremistan (e.g. wealth of people): computing the mean, variance, and regression is useful in Mediocristan, because you can get a representative sample. The challenge is that much of life is lived in Extremistan, where mean, variance, and regression are meaningless (e.g. if you take hundreds of people and add one more it will not change the height mean too much, but if you measure wealth mean, an additional person might have more than all the rest combined). [learn more]

5. Black Swans: events that are characterized by “rarity, extreme impact, and retrospective (though not prospective) predictability”. The challenge is that we fool ourselves into believing we know more than we actually do. We restrict our thinking to the irrelevant, while large events continue to surprise us and shape our world. The “antidote” is to rethink our strategies to be more robust, or even antifragile, in the face of uncertainty. [learn more]

You can find hundreds of interesting ideas and principles in his books, therefore I fully endorse all of them: Antifragile, Black Swan, Skin in the Game, Fooled by Randomness and The Bed of Procrustes. They are amazing.

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