The Econophysics Blog

This blog is dedicated to exploring the application of quantiative tools from mathematics, physics, and other natural sciences to issues in finance, economics, and the social sciences. The focus of this blog will be on tools, methodology, and logic. This blog will also occasionally delve into philosophical issues surrounding quantitative finance and quantitative social science.

Thursday, November 30, 2006

New Scientist's Interview of Nassim Taleb: Life is Unpredicatble - Get Used to It

Nassim Nicholas Taleb has posted an interview that the New Scientist did with him in July: Life is unpredictable - get used to it (Michael Bond, July 1, 2006). In the article, Taleb discussed what he calls "type two" randomness -- which he has also referred to, in the past, as "wild randomness" -- or "black swans." "Type two" randomness (or "wild randomness" or "black swans") are those unpredictable and extreme events that have 'catastrophic' -- either for good or for ill -- impacts on society and nature. Unlike "type one" randomness -- that which we encounter in such textbook favorites like the bell curve (or the so-called 'normal' distribution) or flipping of coins -- "black swans" are not well-behaved enough for us to 'manage' in the conventional ways with which we try to analyze and manage uncertainty.

Nassim Taleb will outline his views in greater detail in his forthcoming book, The Black Swan. If it is anything remotely as mind-blowing as his previous book, Fooled by Randomness, I'm definitely looking forward to reading it.

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