Black Swan 101

[Cain]

I've been going through the book again with a pen and notepad, trying to get some of the ideas presented within to their most basic level, hopefully to create a short, scepticism guide for the tl/p/o;dr crowd.  Here is Part One.

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What you don't know is far more relevant than what you do.

Being unexpected is what gives the Black Swan its impact.

'Experts' are no better at making predictions than anyone else – only at using technical jargon to maintain a plausible narrative.

Planning does not work, however allowing people to tinker and experiment and get rewarded for fortunate accidents does.

We learn specifically from a Black Swan event.  They do not help us generate metarules.

Recursive events (events that cause other events, feedback loops) are key to creating Black Swans and maintaining complexity.

There are few rewards or recognition for acts of prevention.

Platonicity:  what happens when we mistake the map for the territory, the abstract for the real, the neat concepts for the messy reality.  Potentially useful, but limited and have random and unforeseen side effects when they do fail (Anerstic Delusion).

Sterile scepticism: talk is cheap, talk about language problems, philosophy and pseudo-scepticism that plays around with word definitions to eliminate the problems of randomness are even cheaper.

Stories replace stories.  You need a better narrative to replace a bad or ineffective one.

The triplet of opacity:  everyone thinks they know more than they do, they assess history retroactively (hindsight is 20/20) and the over evaluation of factual information and "authoritative" persons.

History jumps, it does not crawl or steadily progress.

People will cluster around the same framework of analyses, no matter how non-factual or temporary these frameworks are.  This is a result of pathological categorization – wanting to put people in boxes to explain their behaviour.

Events fall into one of two domains: Extremistan or Mediocristan.  Events in Mediocristan are scalable and basically predictable.  Randomness is mild, it usually falls within the ranges of a Bell Curve.  In Extremistan, events are non-scalable and much more extreme.  Usually, Mediocristan events are those related to biology (for example, height) whereas those related to Extremistan are socially based (income, or book sales).

Inductive logic is for suckers: working from particulars to general rules is a recipe for disaster.  Past indicators are not a guarantee of future performance.

The Black Swan is a problem relative to expectation and lack of knowledge.  Those most certain of the future are the most likely to get tripped up and fall flat on their face.

Most people, given the choice, will choose to believe they live in Mediocristan, even when the evidence shows they do not.

Knowledge is domain specific: we have problems translating abstract classroom knowledge into real world applications.  Equally, we can easily navigate a social situation which, when presented as a logical problem, totally confounds us.

Absence of evidence is not evidence of absence.  No evidence of disease is not the same as there being no disease, and just because we do not know the function of something does not mean it has no function.

Corroborative facts cannot tell us what is true, only what is false.  Negative empiricism is superior to naïve empiricism, where one can 'prove' anything with facts.  A negative hypothesis is needed, falsification is needed.

Confirmation bias – we only look for evidence that supports our beliefs.

The narrative fallacy – we like to invent causes for events, even where none exist.  We put explanations and an element of causality into a sequence of facts.  Post hoc rationalization of events without meaning are common.

Narratives allow us to ignore the unusual.

Dopamine will lower your critical thinking abilities: you'll become susceptible to all sorts of fads, such as New Age mysticism, tarot cards or economic forecasts from a lack of it.

Information is costly to obtain – the more random the information the harder it is to store.  Hence stories allow us to store more information, but with the downside of a loss of appreciation of the true randomness present.

Both art and science are symptomatic of our need to reduce complexity and inflict basic order on human existence.

People can and will hold incompatible and disparate beliefs based on the same factual evidence.

In the absence of other information, we will rely on stereotypes or even complete nonsense to explain events.

There are two types of Black Swan, the narrated and the truly unexpected.  The narrated Black Swan is an overrated and hyped rare event, the true Black Swan is not talked about.

We are biologically constructed to seek small, yet repeatable and sustainable rewards. 

The Black Swan is an asymmetry of consequences – either positive or negative.

You can either be a sucker, and run blindly into the danger you didn't know was there – or you can slowly bleed in the face of dangers you knew existed while hoping that it will lead to a pay-off that is worth it.

Silent evidence: often we are mislead by the sample in any experiment, because we do not take into account those who failed to be counted (the dead supplicants fallacy).

The survivor bias: we work from the fact someone survived to find the secret of their success, but in reality the fact that they survived is the secret of their success.  People do not write about or promote knowledge of their failures.

The Ludic fallacy: life is not like a game.  The sources of uncertainty are not well defined, the "rules of the game" are not totally apparent.  If you treat life like a game, where you know all the rules, the unknown and unexpected will hit you like a truck.

[Jasper]

Not only is that a pile of scrittens, many of them seem worth three average one sentence memebombs.

Going on the eBook, this one.

[e]

The Ludic fallacy: life is not like a game.  The sources of uncertainty are not well defined, the "rules of the game" are not totally apparent.  If you treat life like a game, where you know all the rules, the unknown and unexpected will hit you like a truck.

But...  But...    Lots of games have "elements of chance" in them.  That's part of what makes them fun!

[Triple Zero]

Cain: awesome. now pata-something (forgot his name) can read up on this

Felix: not to detract from Cain's list, but personally i found that "Fooled by Randomness"  by the same author treats pretty much the same subject, but in a littlebit more technical/objective-ish manner. the Black Swan really annoyed me at times, claiming untrue things. Fooled by Randomness doesnt make sweeping generalizations, but uses example stories, which somehow give the feeling of a more balanced view. You can also read both, of course.

TheStripedOne: yes, but the mistake in thinking that life is like a game, is that even the elements of chance in a game are controlled. you have the roll of the dice, you have the pieces according to their rules, even if it's random. the difference with life is that uncertainty can break any of the rules, anytime.

it'd be like playing chess, and suddenly this huge robot tank thing warhammer figure enters the board, obliterating your pieces in one turn.

except that in life, you wouldn't complain to the other for cheating, but thanks to the narrative fallacy, you will claim you couldn't have foreseen your defeat, as you are a chess player, not warhammer.

then, the next time you play a game you aren't going to take any chances this time, and have a similar warhammer figure at the ready to defend yourself--only to get squirted in the face with a supersoaker.

[Cainad (dec.)]

  @ supersoaker

The only game I can think of with a real Black Swan randomness element would be 1000 Blank White Cards... and even then it's limited by the imagination of the people involved.

I actually wrote a thing that used a billiards table as a metaphor for "the world." You can't expect to get the exact results you want by hitting the balls in the exact right way, because in real life the balls are all different weights, the table is lumpy and curved, and the other players are allowed to jab you with their sticks while you're lining up a shot.

[Triple Zero]

i read an amazing thing about numerically simulating billiards games (it could even have been from the Black Swan, can't remember). after about 18 shots have been made, you need such accurate information about the initial conditions of the system that any breath of the players or lunar position (or whatever) becomes relevant. (i might have confused this quote a littlebit, but you get the point, i hope)

[Cainad (dec.)]

I think I get it; you mean that as a system progresses, the amount of information needed to accurately predict future outcomes increases rapidly?

[Golden Applesauce]

Uncertainty grows exponentially - but that's getting into chaos theory.  To predict what happens to the billiards game with a given accuracy you need to know the masses of the balls, friction, force of the shot, angle of the shot, where on the ball it connected, where the balls are, where all the lumps on the table are, etc accurately.  There will always be some uncertainty, but if you measure things accurately enough you can deal with it.  But the amount of uncertainty in the system magnifies every time you do something to it.  So we might know the position of the 8 ball to the nearest .1 mm, but then when you hit it you'll only be able to predict its position to the nearest 1 mm or something (because depending on where it is it gets hit at a slightly different angle and goes over bumps in the table differently.)  No matter how accurately you know the initial conditions, after enough shots there will come a time when you can pretty confidently say that you think most of the balls are either on the table or in the pockets and not much else.

[Dr. Pataphoros, SpD]

If this is meant to be a "101" for whatever a Black Swan is, you may want to restructure it into a more coherent format.  An introduction and quick definition of repeatedly used terms followed by categorical breakdown of what you're getting at, maybe.  Right now it reads as a series of one-liners with a few commonalities, jumping from idea to idea. 

Coming into this post with no clue what I was getting "101'd" on I feel like I'm still missing some crucial unifying element to tie this pile of information together.  I get a sort-of general sense where all of this stuff is going, but there's so much disjointed stuff in there that I'd rather not make any assumptions.

Or maybe I'm just totally not getting it.

[Golden Applesauce]

I like the one liners style of information; it feels like a collage.  Much better than wall-of-text.

But what is a Black Swan event anyway?

[Cainad (dec.)]

I like the one liners style of information; it feels like a collage.  Much better than wall-of-text.

But what is a Black Swan event anyway?

Ooh, lemme try:

A Black Swan event is an unpredicted--and arguably unpredictable--occurrence that causes a significant change in the system in which it occurs. For our purposes, Black Swans occur mostly in social, economic, and political systems, rather than natural phenomena. One characteristic of a Black Swan is that it appears to be so improbable that no one suspects it could happen, and what gives it its profound effect is the fact that no one (or at least none of the important people) sees it coming and thus no one is prepared.

A classic example is the Great Depression of the early twentieth century. While we, in retrospect, can look back and see the mistakes that caused it, no one at the time predicted such a sudden, massive drop in stock prices. In fact, based on the recorded information they had at the time, it would have been considered so unlikely that it might as well have been impossible. This is because the information they had was entirely based on trends, and the trend had been, for several years, extremely positive market growth. The critical error they made, and which many analysts and forecasters continue to make, was the assumption that the stock market would follow the same pattern as natural phenomena; that is, they figured that any drop in the stock market would simply be a fluke, with little real consequence, just like the occasional birth of an albino or giant has little significant impact on the gene pool of a species.

But when dealing with things like the stock market, sudden drops are not flukes; they become the real forces of change in the system. One slight drop may have been a harmless fluke, but when the social aspect (namely, panic) is factored in, the result is a massive, catastrophic change that leaves all the analysts and forecasters flabbergasted and screaming, "The chances were on in a billion! We couldn't have known!" as they are tossed out the office windows.

This is only an illustrative example and I'm sure someone could go in to far greater depth about it, but I hope it provides some insight as to what a Black Swan event is supposed to be.

[LMNO]

I like the Turkey metaphor.

A turkey is born, and is well fed for 1000 days.

The turkey looks at it's life, and says, "I have been extremely well cared-for.  My owners must love me.  I am the luckiest turkey in the world.  Based upon past trends, I can expect to live a long and happy life."


Then, the fourth Thursday in November rolls around...

[Cain]

Yeah, thats inductive logic (which incidentally is the basis of most International Relations theory) for you.

[Dr. Pataphoros, SpD]

It seems to me that the primary basis of the Black Swan is rests largely on indeterminism.  We can't know everything, ergo we can't be sure of anything.  I'd be interested to know how free will (or lack thereof) fits into the model.

[Jasper]

People operating on the meme of free will tend to behave accordingly and vice-versa.

Nuff said.