Citation
The Black Swan: The Impact of the Highly Improbable
TL;DR
Rare extreme events dominate outcomes in many domains
Philosophical treatment of fat-tailed distributions and their implications for risk and prediction. Argues that rare, high-impact events ('Black Swans') dominate outcomes in many domains but are systematically underestimated by models assuming normal distributions.
Challenges planning and prediction in power law environments where extreme events occur far more frequently than bell-curve models predict.
Key Findings from Taleb (2007)
- Rare extreme events dominate outcomes in many domains
- Normal distribution models systematically underestimate tail risk
- Black Swan events are retrospectively explicable but prospectively unpredictable
- Need for robustness rather than optimization