the black swan book presentation
TRANSCRIPT
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The Black Swan
Book Presentation Presentation by Pradeep
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“The world will not evolve past its current state of crises by using the same thinking that created the situation” ….. Albert Einstein
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Music Irregular Fracture Disorder
Chaos
Failure
Roughness Error err…
Risk
NoiseImperfect
Crises Complex
Unknown
IrrationalUnlucky
Theme
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Connect the dots
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Contents What is a Black Swan ? The World Today Problem of induction and biases We just can’t predict Aesthetics of randomness Conclusion- Lessons from The Black Swan
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What is a Black swan ? History behind the title (Once upon a time in
Europe) Highly improbable (difficult to predict- an
outlier) Highly Consequential Retrospective ( see it coming!)
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Examples 9/11 Oct. 19, 1987 Harry Potter Computer Internet iPod (10 years back) Google(15 years back)
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The world today Extremistan Vs Mediocristan1
The Flat World (Globalised and interconnected with Web)
Recursive (The Harry Potter effect)
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Mediocristan Vs Extremistan
[ Height, Weight, IQ] [ Wealth, Book Sales, Hits]
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Mild Randomness Wild Randomness
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Problem of induction
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Biases Behavioral Economists- irrationality (Daniel
Kahneman and Amos Tversky1) Confirmation bias2
Narrative fallacy3
Silent evidence Fight with the pecking order Ludic fallacy4
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System 1 and System 2 (Biases) System 1 : Experiential one, effortless,
automatic, fast, Opaque, parallel-processed and can lend itself to errors
System 2 : the cognitive one (thinking), reasoned, effortful, slow, logical, serial and self aware
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Economist.com – what’s your choice ?
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Economist.com- what’s wrong ?
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Narrative fallacy (Biases)
A BIRD IN THE THE HAND IS
WORTHTWO IN THE BUSH
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We just cant predict Examples Track record – Philip Tetlock’s research1 and
WWII Attitude towards prediction2 ? (I don’t know
Vs Guesstimation) Tools of predictions (Bell curve-extremistan
and Spreadsheet-anchoring) Serendipitous world (Sextus empiricus) &
Complex world (Sensex and Swine flu) What to do when you can’t predict ?
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Examples on prediction errors Computer (IBM) Telephone Beatles (expectation) Recent economic recession Tsunami Charles Darwin’s “The origin of species”
paper
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“This telephone has too many shortcomings to be seriously considered as a means of communication.
The device is inherently of no value to us.”
(Western Union memo, 1876)
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“I think there’s a world market for maybe five computers.”
(Thomas Watson, Chairman of IBM, 1943)
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"Everything that can be invented has been invented." -- Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.
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“We don’t like their sound and guitar music is on the way out.”
(Decca Recording Company rejecting the Beatles, 1962)
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Aesthetics of randomness From Mediocristan to Extremistan Challenges with Bell-curve Fractal Geometry (aka Geometry of nature)
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Mediocristan to Extremistan The economics of superstars1
Cumulative advantage (Academic citations) Lingua franca2 (Zipf’s law) The Long Tail- Chris Anderson Globalisation (Reason behind recent
recession ?)
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The aesthetics of randomness Benoit Mandelbrot ( Rock star of
Mathematics- Author- (Mis) behavior of markets)
Fractal Geometry or Geometry of Nature (irregularity, Chaos )
What’s common (Connect Dots ?) (Music, Literature, Markets, Sociology, Temples, Nature, Star wars graphics)
Symmetry, Scalable2 , exponential1 80/20 or 50/01
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Pradeep-XYZ
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Pradeep-XYZ
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Fractals captured in camera…
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Indian Temples
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Animated fractal mountain
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The End
“Our knowledge can only be finite, while our ignorance must necessarily be infinite.”…Karl Popper
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Appendix
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What to do when you can’t predict ? Being a fool in the right places (be human) Be prepared (Barbell strategy) The idea of positive accident (love to fail as
Americans do)
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Time Scale
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