How to Live in a World We Don’t Understand

Incerto by Nassim Nicholas Taleb

Incerto (Fooled by Randomness, The Bed of Procrustes, The Black Swan, Antifragile, Skin in the Game) by Nassim Nicholas Taleb
1600 pages of gold

Incerto is a five-volume (Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile, and Skin in the Game) essay on uncertainty. It is about how to live in a world we don’t understand.

The central message is that while there is high uncertainty in the world, what to do about it is always certain. Uncertainty makes decisions straightforward.

These are my reading notes.

I. Fooled by Randomness

It’s more random than we think.

1. Solon’s Warning: The Uncertain Future is Yet to Come

Chance favors the prepared. Hard work, showing up on time, etc are necessary but may be insufficient as they do not cause success.

By definition, lucky fools do not bear the slightest suspicion that they may be lucky fools.

It does not matter how frequently something succeeds if failure is too costly to bear.

One cannot judge the performance in any given field by the results, but by the cost of the alternative. $10 million earned through Russian roulette does not have the same value as $10 miilion earned through the practice of dentistry. One’s dependence on randomness is greater than the other.

Reality is even more vicious than Russian roulette:

  1. It delivers the fatal bullet rather infrequently. After a few dozen tries, one forgets about the existence of a bullet, uner a numbing sense of security.
  2. One does not observe the barrel of reality.
  3. There is an ingratitude factor in warning people about something abstract.

People do not like to insure against something abstract; the risk that merits their attention is always something vivid.

People learn only from their own mistakes.

Somehow all respect we may have for history does not translate well into our treatment of the present.

Things are always obvious after the fact. A vicious effect of hindsight bias is that those who are very good at predicting the past will think of themselves as good at predicting the future.

A mistake is not something to be determined after the fact, but in the light of the information until that point.

As the world becomes more and more complicated, our minds are trained for more and more simplification. That is one of the many reasons that journalism is one of the greatest plagues today.

People do not realize that media is paid to get your attention. Theyoften think that it will surely be the next batch of news that will really make a difference to their understanding of things.

Reduce the noise, focus on the signal.

“The wise man listens to meaning; the fool only gets the noise” — Cavafy

Over a short time increment, one observes the variability of the portfolio, not the returns. Our emotions are not designed to understand this point. People who look too closely at randomness burn out, their emotions drained by the series of pangs they experience.

Wealth does not count so much into one’s well-being as the route one uses to get to it.

We do not need to be rational and scientific when it comes to the details of our daily life — only in those that can harm us or threathen our survival. Modern life invites us to do the opposite.

If one is going to be fooled by randomness, it better be of the beautiful (and harmless) kind.

Whenever there is asymmetry in outcomes, the average survival has nothing to do with the median survival.

People confuse probability and expectation because much of their schooling comes from examples in symmetric envrionments, like a coin toss. Reality does not have the same closed and symmetric laws and regulations as games.

Rare events are always unexpected, otherwise they would not occur.

There is no point searching for patterns that are available to everyone with a brokerage account; once detected, they would be self-canceling.

Self-discoveries last.

2. Monkey’s on Typewriters

If one puts an infinite number of monkeys in front of typewriters, and lets them clap away, there is a certainty that one of them would come up with an exact version of the Iliad. Now, would you invest your life’s savings on a bet that this monkey would write the Odyssey next?

If someone has performed better than the crowd in the past, there is a presumption of his ability to do better in the future. But this presumption may be very weak because it all depends on two factors:

  1. The profession’s randomness content
  2. The number of monkeys in operation

If there are five monkeys in the game, it would be extremely impressive if one of them wrote the Iliad. However, if there are a billion, it would be surprising if none of them got some well-known piece of work, just by luck.

Unfortunately, in real life the other monkeys are uncountable and we only see the winners which gives us a mistaken perception of the odds (i.e. survivorship bias).

It is not that Warren Buffett is unskilled; only that a large population of random investors will almost necessarily produce someone with his track record just by luck.

Mild success can be explainable by skills and labor. Wild success is attributable to variance.

The mistake of ignoring survivorship bias is chronic because we are trained to take advantage of the information that is lying in front of our eyes, ignoring the information that we do not see.

Even a broken clock is right twice a day.

That all millionaires were persistent, hardworking people does not make persistent hard workers become millionaires.

Nobody accepts randomness in his own success, only in his failure.

Life is unfair in a nonlinear way. The information age, by homogenizing our tastes, is causing the unfairness to be even more acute — those who win capture almost all the customers (winner-take-all effect).

Our brain is not cut out for nonlinearities. Our emotional apparatus is designed for linear causality.

The problem with thinking is that it causes you to develop illusions.

One central aspect of a heuristic is that it is blind to reasoning.

The fact that the losses hurt more than the gains, and differently, makes your total wealth less relevant than the last change in it.

Because of anchoring, wealth itself does not really make one happy (above, of course, some subsistence level); but positive changes in wealth may, especially if they come as “steady” increases.

This anchoring to a number is the reason people do not react to their total accumulated wealth, but to differences of wealth from whatever number they are currently anchored to.

We reason in 2 ways: System 1 (heuristics) and System 2 (rationality).

Our natural habitat does not include much information. An efficient computation of the odds was never necessary until very recently. Much of our problems come from the fact that we have evolved out of such a habitat much faster than our genes. Even worse, our genes have not changed at all.

One cannot make a decision without emotion.

Many journalists claim to provide an explanation for something that amounts to perfect noise.

A trick to know if something real in the world is taking place is to only look at the large percentage changes. Unless something moves by more than its usual daily percentage change, the event is deemed to be noise.

It is not the estimate that matters so much as the degree of confidence.

3. Wax in The Ears

In Book 12 of the Odyssey, the hero encounters the sirens whose songs are known to charm the sailors into madness. He orders his men to fill their ears with wax and tie him to the mast and not release him under any conditions. Odysseus struggles to get loose but his men tie him even further until they are safely past the poisoned sounds.

The lesson here is to not even attempt to be Odysseus. Realize that you cannot fight your emotions.

The small daily emotions are not rational but we need them to function properly.

Wittgenstein’s ruler: unless the source of the statement has extremely high qualifications, the statement will be more revealing of the author than the information intended by him.

Most of us know pretty well how we should behave. It is the execution that is the problem, not the absence of knowledge.

Science evolves from funeral to funeral.

Epic heroes were judged by their actions, not by the results.

Exhibit sapere vivere in all circumstances. The only article Lady Fortuna has no control over is your behavior.

The higher up the corporate ladder, the higher the compensation. However, and in general (provided we exclude risk-bearing entrepreneurs), the higher up the corporate ladder, the lower the evidence of contribution.

Repetitiveness is key for the revelation of skills because of ergodicity.

CEOs are not entrepreneurs, they are often empty suits.

Causality is not clear. The quesion remains whether optimizers are unhappy because they are constantly seeking a better deal or if unhappy people tend to optimize out of their misery.

We are not made for clear-cut, well-delineated schedules. We are made to live like firemen, with downtime for lounging and meditating between calls, under the protection of uncertainty.

We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.

II. The Bed of Procrustes

Philosophical aphorisms contrasting the classical values of courage, elegance, and erudition against the modern diseases of nerdiness, philistinism, and phoniness.

  • Education makes the wise slightly wiser, but it makes the fool vastly more dangerous.
  • Your brain is the most intelligent when you don’t instruct it on what to do.
  • Work destroys your soul by stealthily invading your brain during the hours not officially spent working; be selective about professions.
  • In nature we never repeat the same motion; in captivity (office, gym, commute, sports), life is just repetitive-stress injury. No randomness.
  • If you know, in the morning , what your day looks like with any precision, you are a little bit dead — the more precision, the more dead you are.
  • Procrastination is the soul rebelling against its entrapment.
  • Never say no twice if you mean it.
  • Most mistakes get worse when you try to correct them.
  • The test of whether you really liked a book is if you reread it (and how many times); the test of whether you really liked someone’s company is if you are ready to meet him again and again.
  • Being unimaginative is only a problem when you are easily bored.
  • Friendship that ends was never one; there was at least one sucker in it.
  • Most people fear being without audiovisual stimulation because they are too repetitive when they think and imagine things on their own.
  • It is a very powerful manipulation to let others win the small battles.
  • Life is about execution rather than purpose.
  • If you get easily bored, it means your BS detector is functioning properly; if you forget (some) things, it means that your mind knows how to filter; and if you feel sadness, it means that you are human.
  • It is a very recent disease to mistake the unobserved for the nonexistant; but some are plagued with the worse disease of mistaking the unobserved for the unobservable.
  • The ultimate freedom lies in not having to explain why you did something.
  • It is not possible to have fun when you try.
  • Automation makes otherwise pleasant activities turn into “work”.
  • For life to be really fun, what you fear should line up with what you desire.
  • Religion isn’t so much about telling man that there is one God as about preventing man from thinking that he is God.
  • The book is the only medium left that hasn’t been corrupted by the profane: everything else on your eyelids manipulates you with an ad.
  • It is easier to fast than to diet.
  • What fools call “wasting time” is most often the best investment.
  • You can control a slave much better by convincing him that he is an employee.
  • The fastest way to become rich is to socialize with the poor; the fastest way to become poor is to socialize with the rich.
  • You will be civilized on the day you can spend a long period doing nothing, learning nothing, and improving nothing, without feeling the slightest amount of guilt.
  • Someone who says “I am busy” is either declaring incompetence (and lack of control of his life) or trying to get rid of you.
  • To succeed in life requires a total inability to do anything that makes you uncomfortable when you look at yourself in the mirror.
  • You are rich if and only if money you refuse tastes better than money you accept.
  • The difference between love and happiness is that those who talk about love tend to be in love, but those who talk about happiness tend not to be happy.
  • People focus on role models; it is more effective to find antimodels — people who don’t want to resemble when you grow up.
  • Most feed their obsessions by trying to get rid of them.
  • It seems that it is the most unsuccessful people who give the most advice, particularly for writing and financial matters.
  • There are two types of people: those who try to win and those who try to win arguments. They are never the same.
  • The rational heuristic is to avoid any market commentary from anyone who has to work for a living.
  • Bureaucracy is a construction designed to maximize the distance between a decision-maker and the risks of the decision.
  • Social media are severly antisocial, health foods are empirically unhealthy, knowledge workers are very ignorant, and social sciences aren’t scientific at all.
  • Executive programs allow us to watch people who have never worked lecturing those who have never pondered.
  • The three most harmful addictions are heroin, carbohydrates, and a monthly salary.
  • Only in recent history has “working hard” signaled pride rather than shame for lack of talent, finesse, and mostly sprezzatura.
  • Modernity has replaced process with result and the relational with the transactional.
  • What they call “play” (gym, travel, sports) looks like work; the harder they try, the more captive they are.
  • For everything, use boredom in place of a clock, as a biological wristwatch, though under constraints of politeness.
  • A heuristic on whether you have control of your life: can you take naps?
  • If the professor is not capable of giving a class without preparation, don’t attend. People should only teach what they have learned organically, through experience and curiosity… or get another job.
  • Charm lies in the unsaid, the unwritten, and the undisplayed. It takes mastery to control silence.
  • The fool generalizes the particular; the nerd particularizes the general; some do both; and the wise does neither.
  • You want to be yourself, idiosyncratic; the collective (school, rules, jobs, technology) wants you generic to the point of castration.
  • It is very difficult to argue with salaried people that the simple can be important and the important can be simple.
  • The tragedy is that much of what you think is random is in your control and, what’s worse, the opposite.
  • The fool views himself as more unique and others more generic; the wise views himself as more generic and others more unique.
  • To understand “progress”: all places we call ugly are both man-made and modern, never natural or historical.
  • One of the biggest problems with modernity is the growing separation of the ethical and the legal.
  • Another marker for charlatans: they don’t voice opinions that can get them in trouble.
  • Never take advice from a salesman, or any advice that benefits the advice giver.
  • You may outlive your strength, never your wisdom.
  • The ethical man accords his profession to his beliefs, instead of according his beliefs to his profession.
  • To understand how something works, figure out how to break it.
  • The solutions (on balance) need to be simpler than the problems.
  • When conflicted between two choices, take neither.
  • Most can’t figure out why one can like rigorous knowledge and despise academics, yet they understand that one can like food and hate canned tuna.
  • Those who can’t do shouldn’t teach.
  • Change your anchor to what did not happen rather than what did happen.
  • Knowledge is subtractive, not additive — what we subtract (reduction by what does not work, what not to do), not what we add (what to do).
  • Happiness: we don’t know what it means, how to measure it, or how to reach it, but we know extremely well how to avoid unhappiness.
  • Conscious ignorance, if you can practice it, expands your world; it can make things infinite.
  • It takes a lot of intellect and confidence to accept that what makes sense doesn’t really make sense.
  • Suckers think that you can cure greed with money, addiction with substances, expert problems with experts, banking with bankers, economics wiith economists, and debt crises with debt spending.
  • Never take investment advice from someone who has to work for a living.
  • It is a sign of weakness to avoid showing signs of weakness.
  • Risk takers never complain. They do.
  • Success is not being on top of a hierarchy, it is standing outside of all hierarchies.
  • Never trust a man who doesn’t have enemies.
  • The only people who think that real world experience doesn’t matter are those with no real world experience.
  • It is much better to do things you cannot explain than explain things you cannot do.
  • Wisdom isn’t about understanding things (and people); it is knowing what they can do to you.

III. The Black Swan

A Black Swan is an outlier that carries an extreme impact and has retrospective predictability. A small number of Black Swans explain almost everything in our world. Yet we tend to act as if they don’t exist.

1. Umberto Eco’s Antilibrary

Your library should contain as much of what you do not know as your financial means allow you to put there. The more you know, the larger your collection of unread books (i.e. antilibrary) should be.

An antischolar is a skeptical empiricist; someone who focuses on the unread books and attempts not to treat his knowledge as a treasure, a possession, or even a self-esteem enhacement device.

The human mind suffers from 3 ailments as it comes into contact with history:

  1. Illusion of understanding: we understand less than we realize and the world is more complicated than we believe.
  2. Retrospective distortion: history seems clearer in books than it is in reality. Historydoes not crawl, it jumps between major, unexpected events.
  3. Platonification: people, especially the learned and authoritative, create categories and oversimplify which leads us to misunderstand the fabric of the world and miss Black Swans.

In Mediocristan, when the sample is large, no single instance will significantly change the aggregate. Matters that belong to Mediocristan (subject to type 1 randomness): height, weight, calorie consumption, car accidents, mortality rates, IQ, income for non-scalable professions etc. Here we must endure the tyranny of the collective, the routine, the obvious, and the predicted.

In Extremistan, inequalities are such that one single observation can disproportionately impact the aggregate. Matters that belong to Extremistan (subject to type 2 randomness): wealth, income, book sales, earthquake damages, deaths in wars, size of planets, financial markets, economic data, income for scalable professions etc. Here we are subjected to the tyranny of the singular, the accidental, the unseen, and the unpredicted.

Extremistan is where most of the Black Swan action is, but you can still experience severe Black Swans in Mediocristan, though not easily.

Consider a turkey that is fed every day. Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race “looking out for its best interests”, as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.

The feeling of safety reached its maximum when the risk was at the highest.

From the standpoint of the turkey, the nonfeeding of the 1001st day is a Black Swan. For the butcher, it is not, since its occurrence is not unexpected. Hence, the Black Swan is a sucker’s problem: it occurs relative to your expectation.

Matters should be seen on some relative, not absolute, timescale: earthquakes last minutes, 9/11 lasted hours, but historical changes and technological implementations are Black Swans that can take decades. In general, positive Black Swans take time to show their effect while negative ones happen very quickly — it is much easier and much faster to destroy than to build.

When “conservative” bankers make profits, they get the benefits; when they are hurt, we pay the costs. Banks have privatized their gains and socialized their losses (asymmetry).

Awareness of a problem does not mean much — particularly when you have special interests and self-serving institutions in play.

It is extremely convenient for us to assume that we live in Mediocristan. Such an assumption magically drives away the problem of induction (difficulty of generalizing from available information, or of learning from the past, the known, and the seen). Wishful thinking!

With tools and fools, anything can be easy to find. You take past instances that corroborate your theories and you treat them as evidence. A series of corroborative facts isn’t necessarily evidence. Seeing a million white swans does not confirm the nonexistence of black swans. However, seeing one black swan certifies that all swans are not white!

We are not naive enough to believe that someone will be immortal because we have never seen him die.

Humans have a hunger for rules because we need to reduce the dimension of matters so they can get into our heads. The more you summarize, the more order you put in, the less randomness. Hence, the same condition that makes us sumplify pushes us to think that the world is less random than it actually is. And the Black Swan is what we leave out of simplification.

Positive lumpy outcomes for which we either collect big or get nothing prevail in numerous occupations, those invested with a sense of mission. The problem of lumpy payoffs is not so much the lack of income they entail, but the pecking order, the loss of dignity, the subtle humiliations near the watercooler. Our highest currency is respect.

Our intuitions are not cut our for nonlinearities. Consider out life in a primitive environment where process and result are closely connected. Our mental apparatus is designed for causality. Yet, the world is more nonlinear than we think. Linear progression, a Platonic idea, is not the norm.

Let us separate the world in two categories. Some people are like the turkey, exposed to a major blowup without being aware of it, while others play reverse turkey, prepared for big events that might surprise others.

Some matters that belong to Extremistan are extremely dangerous but do not appear to be beforehand, since they hide and delay their risks — so suckers think they are “safe”. It is indeed the property of Extremistan to look less risky, in the short run, than it really is.

Losers in history don’t write histories of their experiences. Hence, the neglect of silent evidence is endemic to the way we study comparative talent, particularly in activities that are plagued with winner-take-all attributes.

Now consider the cemetary. The graveyard of failed persons will be full of people who shared the following traits: courage, risk taking, optimism etc. Just like the population of millionaires. There may be some difference in skills but what truly separates the two is for the most part plain luck.

Many successful people will try to convince you that their achievements couldn’t be accidental. In these situations, use the reference point argument: don’t compute odds from the vantage point of the winner but from all those who started in the cohort.

We are explanation-seeking animals who tend to think that everything has an identifiable cause and grab the most apparent one as the explanation.

The educational system is wrong in forcing students to squeeze explanations out of subject matters and shaming them for withholding judgement.

The ludic fallacy refers to the fact that the attributes of real life uncertainty have little connection to the sterilized ones encountered in exams and games.

Those who spend too much time with their noses glued to maps will tend to mistake the map for the territory.

2. We Just Can’t Predict

The world is far, far more complicated than we think, which is not a problem, except when most of us don’t know.

“The future ain’t what it used to be” — Yogi Berra

Epistemic arrogance bears a double effect: we overestimate what we know, and underestimate uncertainty, by reducing the space of the unknown.

The more information you give someone, the more hypotheses they will formulate along the way, and the worse off they will be. They see more random noise and mistake it for information.

No matter what anyone tells you, it is a good idea to question the error rate of an expert’s procedure. Do not question his procedure, only his confidence.

Experts only play a role in some professions. Generally, things that don’t move have experts while things that move have non-experts (empty suits).

Experts who tend to be experts: astronomers, test pilots, chess masters, accountants, physicists, grain inspectors, soil judges…

Experts who tend not to be experts: stockbrokers, college admission officers, political scientists, intelligence analysts, financial forecasters…

Professions that deal with the future and base their studies on the non-repeatable past have an expert problem.

The problem with empty suits is that they don’t know what they don’t know.

What matters is not how often you are right, but how large your cumulative errors are.

We humans are the victims of an asymmetry in the perception of random events. We attribute our successes to our skills, and our failures to external events outside our control, namely to randomness.

The most important advances are the least predictable ones.

Popper’s central argument is that in order to predict historical events you need to predict technological innovation, itself fundamentally unpredictable.

If you believe in free will you can’t truly believe in social science and economic projection. You cannot predict how people will act.

Randomness is just unknowledge. The world is opaque and appearances fool us.

Be human. Do not try to avoid predicting, just be a fool in the right places. Know how to rank beliefs not according to their plausibility but by the harm they may cause.

Knowing that you cannot predict does not mean that you cannot benefit from unpredictability. Be prepared and maximize the serendipity around you.

Barbell strategy: be as hyperconservative and hyperaggressive as you can be instead of being mildly aggressive or conservative. For instance, invest 90% in extremely safe assets like Treasury bills, and 10% in extremely speculative bets. That way you do not depend on errors of risk management; no Black Swan can hurt you, beyond your floor, the nest egg that you have in maximally safe investments. Make sure to have plenty of these small bets.

3. Those Grey Swans of Extremistan

Gaussian — bell curve variations face a headwind that makes probabilities drop at a faster rate as you move away from the mean, while “scalables”, or Mandelbrotian variations, don’t have such a restriction.

Measures of uncertainty that are based on the bell curve disregard the possibility, and the impact, of sharp jumps and are, therefore, inapplicable to Extremistan.

The danger is that one can produce data “corroborating” that the underlying process is Gaussian by finding periods that do not have rare events.

We can only use the Gaussian approach in variables for which there is a rational reason for the largest not to be far away from the average.

We run the biggest risk of all: we handle matters from Extremistan, but treated as if they belonged to Mediocristan, as an “approximation”.

In the last 50 years, the 10 most extreme days in the financial markets represent half the returns.

If the world of finance were Gaussian, an episode such as the crash (more than 20 standard deviations) would take place every several billion lifetimes of the universe.

Many people do not understand the elementary asymmetry involved: you need one single observation to reject the Gaussian, but millions of observations will not fully confirm the validity of its application. Why? Because the Gaussian bell curve disallows large deviations, but tools of Extremistan, the alternative, do not disallow long quiet stretches.

“The degeneration of philosophical schools in its turn is the consequence of the mistaken belief that one can philosophize without having been compelled to philosophize by problems outside philosophy. Genuine philosophical problems are always rooted outside philosophy and they die if these roots decay. These roots are easily forgotten by philosophers who “study” philosophy instead of being forced into philosophy by the pressure of non-philosophical problems.” — Karl Popper

4. How to Get Even with the Black Swan

Be skeptical about confirmation — though only when errors are costly — not about disconfirmation.

Worry less about small failures, more about large.

Don’t worry about things you can’t do anything about.

Be aggressive when you can gain exposure to positive Black Swans and very conservative when you are under the threat of negative Black Swans.

You have far more control over your life if you decide on your criterion by yourself.

5. Learning From Mother Nature, the Oldest and the Wisest

First, Mother Nature likes redundancies. It allows you to survive under adversity thanks to the availability of spare parts. The opposite of redundancy is naive optimization and debt. An economist would find it inefficient to maintain two lungs and two kidneys.

Second, Mother Nature does not like anything too big. It does not limit the interactions between entities; it just limits the size of its units.

Third, Mother Nature does not like too much connectivity. Larger environments are more scalable than smaller ones — allowing the biggest to get even bigger, at the expense of the smallest.

The organism with the largest number of secondary uses is the one that will gain the most from environmental randomness and epistemic opacity.

The idea is to let human mistakes and miscalculations remain confined, and to prevent their spreading through the system, as Mother Nature does.

6. Phronetic Rules

  • Have respect for time and nondemonstrative knowledge (Mother Nature).
  • Avoid optimization; learn to love redundancy. Thus, avoid debt and overspecialization.
  • Avoid prediction of small probability payoffs — though not necessarily of ordinary ones.
  • Beware the “atypicality” of remote events. Past shortfalls don’t predict sebsequent shortfalls, so we don’t know exactly what to stress-test for.
  • Beware moral hazard with bonus payments.
  • Avoid some risk metrics. Conventional metrics, nased on Mediocristan, adjusted for large deviations, don’t work.
  • Do not confuse absence of volatility with absence of risk. Conventional metrics using volatility as an indicator of stability fool us, because the evolution into Extremistan is marked by a lowering of volatility — and a greater risk of big jumps.

7. Principles for a Black-Swan-Robust Society

  1. What is fragile should break early, while it’s still small.
  2. No socialization of losses and privatization of gains.
  3. People who were driving a schoolbus blindly (and crashed it) should never be given a new bus.
  4. Don’t let someone with an “incentive” bonus manage a nuclear plant or your financial risks.
  5. Compensate complexity with simplicity.
  6. Do not give children dynamite sticks, even if they come with a warning label.
  7. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure problems of overleverage is not homeopathy, it’s denial.
  8. Citizens should not depend on financial assets as a repository of value and should not rely on fallible “expert” advice for the retirement.

IV. Antifragile

In the presence of nonlinearities and asymmetries, the average fails to represent anything meaningful.

1. The Triad (Fragile, Robust, Antifragile)

Antifragility and fragility mean potential gain or harm from exposure to the extended disorder family: uncertainty, variability, imperfect and incomplete knowledge, chance, chaos, volatility, disorder, entropy, time, the unknown, randomness, turmoil, stressors, errors, dispersion of outcomes, and unknowledge. The robust doesn’t care too much.

In Greek mythology:

  • Damocles was invited to a luxurious banquet, but with a sword hanging over his head, tied to the ceiling with a single hair from a horse’s tail that will eventually break under pressure. It’s only a matter of time before the sword strikes him down. Damocles represents fragility.
  • The Phoenix is reborn from its own ashes whenever it is destroyed. It always returns to its initial state. The Phoenix represents robustness.
  • Hydra, a serpent-like creature with many heads dwelling in the lake of Lerna grows back two heads each time one is cut off. So harm is what it likes. Hydra represents antifragility.

Sophistication is born out of hunger” — Latin saying

It is said that the best horses lose when they compete with slower ones, and win against better rivals. Undercompensation from the absence of a stressor, inverse hormesis, absence of challenge, degrades the best of the best.

Causal opacity makes the predictability of specific events low.

The antifragility of some comes necessary at the expense of the fragility of others. In a system, the sacrifices of some units are often necessary for the well-being of the whole.

While hormesis corresponds to situations by which the individual organism benefits from direct harm to itself, evolution occurs when harm makes the individual organism perish and the benefits are transferred to the survivors, and future generations.

When you are fragile, you depend on things following the exact planned course, with as little deviation as possible. Hence, predictive systems cause fragility.

It is often the mistakes of others that benefit the rest of us — and, sadly, not them.

Good systems such as airlines are set up have small errors, independent of each other — or, in effect, negatively correlated to each other, since mistakes lower the odds of future mistakes.

For the economy to be antifragile, every single individual business must necessarily be fragile, exposed to breaking.

With bailouts, government typically favor a certain class of firms that are large enough to require being saved in order to avoid contagion to other businesses. This is the opposite of healthy risk-taking; it is transferring the fragility from the unfit to the collective. People have difficulty realizing that the solution is building a system in which nobody’s fall can drag others down — for continuous failures work to preserve the system. Paradoxically, many government interventions and social policies end up hurting the weak and consolidating the established.

Heroism and the respect it commans is a form of compensation by society for those who take risks for others. Entrepreneurship is a risky and heroic activity, necessary for growth or even mere survival of the economy.

There is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner) — likewise, there is no such thing as a failed entrepreneur or failed scientific researcher, anymore than there is a successful babbler, philosophaster, commentator, consultant, lobbyist, or business school professor who does not take any personal risks.

2. Modernity and the Denial of Antifragility

Modernity here is defined as human’s large-scale domination of the environment, the systemic smoothing of the world’s jaggedness, and the stifling of volatility and stressors. It corresponds to the systemic extraction of humans from their randomness-laden ecology. It’s the spririt of an age marked by rationalization (naive rationalism), the idea that society is understandable, and must be designed, by humans. There is dependence on narratives and a widened difference between the sensational and the relevant.

We hurt systems with the very best intentions by playing conductor. We are fragilizing social and economic sysems by denying them stressors and randomness, puting them in the Procrustean bed of cushy and comfortable — but ultimately harmful — modernity.

Avoidance of small mistakes makes the large ones more severe. The longer one goes without a market trauma, the worse the dammage when commotion occurs.

No stability without volatility.

It is easy to assess iatrogenics (i.e. causing harm while trying to help) when the surgeon amputates the wrong leg, but when you medicate a child for an imagined or invented psychiatric disease, say ADHD or depression, instead of letting him out of the edge, the long-term harm is largely unaccounted for.

Since no intervention implies no iatrogenics, the source of harm lies in the denial of antifragility, and to the impression that we humans are so necessary to making things function.

Intervening to limit size (companies, airports, or sources of pollution), concentration, and speed are beneficial in reducing Black Swan risks.

The media only report the most anecdotal and sensational of cases giving us a more and more distorted map of real risks. Likewise, by presenting us with explanations and theories, the media induce an illusion of understanding of the world.

Owing to domain dependence, we forget the need to check our map of the world against reality. So we are living in a more and more fragile world, while thinking it is more and more understandable.

The best way to mitigate interventionism is to ration the supply of information, as naturalistically as possible.

The more data you get, the less you know what’s going on, and the more iatrogenics you will cause.

Avoid iatrogenics from forecasting. We understanding childproofing, but not forecaster-hubris-proofing.

3. A Nonpredictive View of the World

A man is honorable in proportion to the personal risks he takes for his opinion.

You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have some trouble, perhaps even go bust. Why? Someone who predicts will be fragile to prediction errors.

Seneca’s version of Stoicism is antifragility to fate. No downside from Lady Fortuna, plenty of upside.

When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth, so you start living under continuous emotional threat.

The modern Stoic sage transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.

“Wealth is the slave of the wise man and the master if the fool” — Seneca

If you have “nothing to lose” then it is all gain and you are antifragile.

Fragility implies more to lose than to gain, equals more downside than upside, equals (unfavorable) asymmetry.

Antifragility implies more to gain than to lose, equals more upside than downside, equals (favorable) asymmetry.

The first step toward antifragility consists in decreasing downside, rather than increasing upside; that is, by lowering exposure to negative Black Swans and letting natural antifragility work by itself.

About all solutions to uncertainty are in the form of barbells: the combination of extremes kept separate, with avoidance of the middle.

4. Optionality, Technology, and the Intelligence of Antifragility

The option is an agent of antifragility. You are only harmed if you repeatedly pay too much for the option. But we don’t pay for the options given to us by nature and technological innovation. The edge from optionality is in the larger payoff when you are right, which makes it unnecessary to be right too often.

Trial and error has one overridng value people fail to understand: it is not really random, rather, thanks to optionality, it requires some rationality. One needs to be intelligent in recognizing the favorable outcome and knowing what to discard.

Epiphenomena refers to a set of illusions whereby you observe both A and B and think that A causes B or B causes A. For instance, lecturing birds on flying and believing that the lecture is the cause of these wonderful skills.

The idea of educating people to improve the economy is novel. In ancient times, learning was for learning’s sake, to make someone a good person, worth talking to.

Green lumber fallacy refers to a situation where one mistakes a source of necessary knowledge for another — less visible from the outside, less tractable, less narratable.

In theory there is no difference between theory and practice; in practice there is — Yogi Berra

Expert problems (in which the expert knows a lot but less than he thinks he does) often bring fragilities, and acceptance of ignorance the reverse.

Practitioners don’t write, they do. Birds fly and those who lecture them are the ones who write their story. So it is easy to see that history is written by losers with time on their hands and a protected academic position.

Governments should spend on non-teleological tinkering, not research. As in venture capital, you bet on the jockey, not the horse.

We accept the domain-specificity of games, the fact that they don’t really train you for life, that there are severe losses in translation. But we find it hard to apply this lesson to technical skills acquired in schools, that is, to accept that what is picked up in the classroom stays largely in the classroom.

Only the autodidacts are free. And not just in school matters — those who decommoditize and detouristify their lives.

“We do not study for life, but only for the lecture rooms” — Seneca

People who build their strength using modern gym machines can lift extremely large weights and develop impressive-looking muscles, but fail to lift a stone. Their strength is extremely domain-specific and their domain doesn’t exist outside of ludic constructs.

The same with people who were selected for trying to get high grades in a small number of subjects rather than follow their curiosity.

Trial and error is freedom. Avoidance of boredom is the only worthy mode of action. Life otherwise is not worth living.

Example of a barbell: play it safe at school and read on your own, have zero expectation from school.

There is such a thing as nonnerdy applied mathematics: find a problem first and figure out the math that works for it.

Much of what other people know isn’t worth knowing.

“What is not intelligible to me is not necessarily unintelligent” — Nietzsche

A fragilista mistakes what he does not understand for nonsense.

5. The Nonlinear and the Nonlinear

The difference between a thousand pebbles and a large stone of eqiuvalent weight is a potent illustration of how fragility stems from nonlinear effects. Every additional weight of the stone harms more than the previous one.

For the fragile, shocks bring higher harm as their intensity increases (up to a certain level). The cumulative effect of small shocks is smaller than the single effect of an equivalent single large shock.

For the antifragile, shocks bring more benefits (equivalently, less harm) as their intensity increases (up to a point).

Black Swan events are increasing as a result of complexity, interdependence between parts, globalization, and the push toward “efficiency”. The world is getting less and less predictable, and we rely more and more on technologies that have errors and interactions that are harder to estimate.

The nonlinear is vastly more affected by extreme events.

To measure fragility, we need to detect acceleration of harm — figure out if our miscalculations or misforecasts are on balance more harmful than they are beneficial.

The function of something becomes different from the something under nonlinearities. The more nonlinear and volatile the something, the more the function divorces itself from the something.

We may never know x, but we can play with the exposure to x, barbell things to defang them; we can control a function of x, f(x), even if x remains vastly beyond our understanding.

The more uncertainty, the more role for optionality to kick in.

6. Via Negativa

Charlatans are recognizable in that they will only give you positive advice, exploiting our gullibility and sucker-pronenessfor recipes that hit you in a flash as just obvious, then evaporate later as you forget them.

In life, antifragility is achieved by not being a sucker.

We know a lot more what is wrong than what is right. Negative knowledge is more robust to error than positive knowledge. Knowledge grows by subtraction much more than by addition.

Since one small observation can disprove a statement, while millions can hardly confirm it, disconfirmation is more rigorous than confirmation.

A modern paradox is that we have more data than ever, yet have less predictability than ever. More data — such as paying attention to the eye colors of the people around when crossing a street — can make you miss the big truck. When you cross the street, you remove data, anything but the essential threat.

7. Time and Fragility

Antifragility implies that the old is superior to the new, and much more than you think.

Positive Black Swans are more unpredictable than negative ones.

Paradox: longer-term predictions involving the currently fragile are more reliable than short-term ones, given that one can be quite certain that what is Black Swan-prone will be eventually swallowed by history since time augments the probability of such an event. In contrast, typical predictions degrade with time; in the presence of nonlinearities, the longer the forecast the worse its accuracy.

Technology is at its best when it is invisible.

Lindy effect: for the perishable, every additional day in its life translates into a shorter life expectancy. For the nonperishable, every additional day may imply a longer life expectancy. Hence, the longer a technology lives, the longer it can be expected to live.

People in risk management only consider risky things that have hurt them in the past, not realizing that, in the past, these occurrences that hurt them severely were completely without precedent, escaping standards.

First principle of iatrogenics: we do not need evidence of harm to claim that a drug or an unnatural via positiva procedure is dangerous.

Second principle of iatrogenics: it is not linear. We should not take risks with near-healthy people (rather, Mother Nature should be the doctor); but we should take a lot more risks with those deemed in danger.

What Mother Nature does is rigorous until proven otherwise; what humans and science do is flawed until proven otherwise.

When the inhabitants of Mother Nature want to do something counter to nature, they are the ones that need to produce the evidence, if they can.

“The good is mostly in the absence of bad” — Ennius

Many people benefit from the removal of products that did not exist in their ancestral habitat.

Distributed randomness is a necessity, not an option: everything big is short volatility. So is everything fast. Modern times don’t like volatility.

V. Skin in the Game

1. A Brief Tour of Symmetry

Complex systems do not have obvious cause-and-effect mechanisms. Hence, under opacity you don’t mess with them.

The first principle of intervention, like that of healers, is first do no harm.

Those who don’t take risks should never be involved in making decisions.

To reduce large structural asymmetries, we need to decentralize. This is based on the notion that it is easier to macrobullshit than microbullshit. Decentralization is convex to variations.

Interventionistas don’t learn because they are not the victims of their mistakes. Skin in the game keeps human hubris in check.

Hammurabi’s code (3,800 years ago): “If a builder builds a house and the house collapses and causes the death of the owner of the house — the builder shall be put to death.” This establishes symmetry between people in a transaction, so nobody can transfer hidden tail risk.

The Silver Rule (do not treat others the way you would not like them to treat you) is more robust than the Golden Rule (treat others the way you would like them to treat you) since it tells you to mind your own business and not decide what is “good” for others. Moreover, we know with much more clarity what is bad than what is good.

Intellectualism refers to the dangerous belief that one can separate action from the results of such action, that one can separate theory from practice, and that one can always fix a complex system in a top-down manner.

Those who talk should do and only those who do should talk.

A side effect of modernism is that as things get more technological, there is a growing separation between the maker and the user. Architects today build to impress other architects, and we end up with strange, irreversible structures that do not satisfy the well-being of their residents.

Success is leading an honorable life. Honor implies that there are some actions you would categorically never do, regardless of the material rewards. It also means that there are things you would do unconditionally, regardless of the consequences.

Entrepreneurs are heroes in our society. They fail for the rest of us.

Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have — or don’t have — in their portfolio.

A free person is someone who cannot be squeezed into dooing something he would otherwise never do.

If you can’t put your soul into something, give it up and leave that stuff to someone else.

2. A First Look at Agency

Beware of the person giving advice, telling you that a certain action on your part is “good for you” while it is also good for him, while the harm to you doesn’t directly affect him.

The ethical is always more robust than the legal. Over time it is the legal that should converge to the ethical, never the reverse. Hence, laws come and go; ethics stay.

Groups behave differently at a different scale. A country is not a large city, a city is not a large family, and the world is not a large village. There are scale transformations.

Politics is not scale-free. For instance, one can be a libertarian at the Fed level, Republican at the state level, Democrat at the local level, and socialist at the family and friends level.

3. That Greatest Asymmetry

The main idea behind complex systems is that the ensemble behaves in ways not predicted by its components. The interactions matter more than the nature of the units.

Hence, the average behavior of the market participant will not allow us to understand the general behavior of the market.

Similarly, understanding the subparts of the brain (say, neurons) work will never allow us to understand how the brain works.

The underlying structure of reality matters much more than the participants, something policymakers fail to understand. Under the right market structure, a collection of idiots produces a well-functioning market.

Minority rule says that it suffices that an intransigent minority with significant skin in the game to reach a minutely small level, say 3–4% of the population, for the entire population to have to submit to their preferences.

The relationship between the intransigent minory and the flexible majority rests on an asymmetry in choices. The minority causes renormalization.

All it takes is a few motivated activists for the banning of some books.

Once a moral rule is established, it will suffice to have a small intransigent minority of geographically distributed followers to dictate a norm in society.

An intolerant minory can control and destroy democracy. So, we need to be intolerant with some intolerant minorities. They violate the Silver Rule.

Had science operated by majority consensus, we would be still stuck in the Middle Ages.

“Never doubt that a small group of thoughtful citizens can change the world. Indeed, it is the only thing that ever has” — Margaret Mead

Revolutions are unarguably driven by an obsessive minority. And the entire growth of society, whether economic or moral, comes from a small number of people.

Society doesn’t evolve by consensus, voting, majority, committees, verbose meetings, academic conferences, or polling; only a few people suffice to disproportionately move the needle.

4. Wolves Among Dogs

Every organizatioon wants a certain number of people associated with it to be deprived of a certain share of their freedom.

Someone who has been employed for a while is giving you strong evidence of submission.

Slave ownership by companies has traditionally taken very curious forms. The best slave is someone you overpay and who knows it, terrified of losing his status.

In the famous tale by Ahiqar, the dog boasts to the wolf all the contraptions of comfort and luxury he has, almost prompting the wolf to enlist. Until the wolf asks the dog about his collar and is terrified when he understands its use. “Of all your meals, I want nothing.” He ran away and is still running.

The question is: would you like to be a dog or a wolf?

Whatever you do, just don’t be a dog claiming to be a wolf.

Freedom entails risks — real skin in the game. Freedom is never free.

A dog’s life is is marked by a feeling of false stability: it may appear smooth and secure, but in the absence of an owner, a dog does not survive.

Wolves are trained to survive. Employees abandoned by their employers cannot bounce back.

Yet, there is a category of employees who aren’t slaves. You can identify them as follows: they don’t care about their corporate reputation.

Ironically, the highest status, that of a free man, is usually indicated by voluntarily adopting the mores of the lowest class.

What matters isn’t what a person has or doesn’t have; it is what he or she is afraid of losing.

To be free of conflict you need to have no friends.

5. Being Alive Means Taking Certain Risks

People can detect the difference between front- and back-office operators. Scars signal skin in the game.

Always do more than you talk. And precede talk with action. For it will always remain that action without talk supersedes talk without action.

The intellectual yet idiot (IYI) is a product of modernity. Typically, the IYI get first-oder logic right, but not second-order (or higher) effects, making him totally incompetent in complex domains. The IYI likes to use buzzwords from philosophy to science when discussing unrelated phenomena; he goes two or three levels too theoretical for a given problem.

There is inequality and inequality. The first is the inequality people tolerate: one has no difficulty acknowledging a large surplus to a deemed hero. The second is the inequality people find intolerable because the subject appears to be just a person like you, except that he has been playing the system, and getting himself into rent-seeking, acquiring privileges that are not warranted.

“Cobbler envies cobbler, carpenter envies carpenter” — Hesiod

Skin in the game prevents systems from rotting.

No downside for some means no upside for the rest.

Inequality is in the disproportion of the role of the tail. The more inequality in the system, the more the winner-take-all effect, the more we depart from the methods of thin-tailed Mediocristan in which economists were trained.

Indeed, for many environments, the relevant data points are those in the extremes; these are rare by definition, and it suffices to focus on those few but big to get an idea of the story.

For a rich person isolated from vertical socializing with the poor, the poor become something entirely theoretical, a textbook reference.

The only effective judge of things is time. For time operates through skin in the game.

Academia has a tendency, when unchecked (from lack of skin in the game), to evolve into a ritualistic self-referential publishing game.

The most convincing statments are those in which one stands to lose.

The deprostitutionalization of research will be done as follows. Force people who want to do “research” to do it on their own time, that is, to derive their income from other sources. Sacrifice is necessary.

A brief tour of your grandparents’ wisdom:

  • Cognitive dissonance: in order to avoid inconsistent beliefs, people rationalize that the graapes they can’t reach got to be sour.
  • Loss aversion: a loss is more painful than a gain is pleasant.
  • Negative advice (via negativa): we know thw wrong better than what’s right.
  • Skin in the game: “You can’t chew with somebody else’s teeth” — Yiddish proverb
  • Antifragility: “When our souls are mollified, a bee can sting” — Cicero
  • Time discounting: “A bird in the hand is better than ten on the tree” — Levantine proverb
  • Madness of crowds: “Madness is rare in individuals, but in groups, parties, nations, it is the rule” — Nietzsche
  • Less is more: “Truth is lost with too much altercation” — Publilius Syrus
  • Overconfidence: “I lost money because of my excessive confidence” — Erasmus
  • The paradox of progress: King Pyrrhus tried to cross into Italy, Cyneas, his adviser, tried to make him feel the vanity of such action. “To what end are you going into such enterprise?” he asked. Pyrrhus answered, “To make myself the master of Italy.” Cyneas: “And so?” Pyrrhus: “To get to Gaul, then Spain.” Cyneas: “Then?” Pyrrhus: “To conquer Africa, then … come rest at ease.” Cyneas: “But you are already there, why take more risks?”

6. Deeper Into Agency

In any type of activity or business divorced from the direct filter of skin in the game, the great majority of people know the jargon, play the part, and are intimate with the cosmetic details, but are clueless about the subject.

Surgeons should not look like surgeons. If you have the choice between two surgeons with equal skills, pick the one who looks like a butcher rather the polished, well-articulated ones withIvy League degrees on the wall, as the former had to overcome a lot more obstacles to arrive where he is due to his “not looking the part”.

A useful heuristic is to use education in reverse: hire, conditional on an equal set of skills, the person with the least label-oriented education. It means that the person had to succeed in spite of the credentialization of his competitors and overcome more serious hurdles.

In any activity, hidden details are only revealed via Lindy (i.e. time).

Never pay for complexity of presentation when all you need are results.

Many problems in society come from the interventions of people sho sell complicated solutions because that’s what their position and training invite them to do.

Russian Roulette allows you to make money 5 times out of 6. This has bankrupted banks, as they lose money very seldom but then they do, they lose more than they ever made.

It is easy to scam people by getting them into complications.

If wealth is giving you fewer options instead of more (and more varied) options, you’re doing it wrong.

You can critizice either what a person said or what a person meant. The former is more sensational, hence lends itself more readily to dissemination. The mark of the charlatan is to defend his position or attack a critic by focusing on some specific statement.

It is immoral to claim virtue witthout fully living with its direct consequences.

If your private life conflicts with your intellectual opinion, it cancels your intellectual ideas, not your private life.

If your private actions do not generalize, then you cannot have general ideas.

Virtue lies mostly in also being nice to those who are neglected by others, the less obvious cases, those people the grand charity business tends to miss. Or people who have no friends and would like someone once in a while to just call them for a chat or a cup of coffee.

Courage is the only virtue you cannot fake.

The perfect virtuous act is to take an uncomfortable position, one penalized by the common discourse.

Advice for young people with noble aspirations:

  1. Never engage in virtue signaling;
  2. Never engage in rent-seeking;
  3. You must start your own business. Put yourself on the line.

Courage (risk taking) is the highest virtue. We need entrepreneurs.

No peace proceeds from bureaucratic ink. If you want peace, make people trade, as they have done for millenia. They will eventually forced to work something out.

What is absent from the data should be taken into account. Silent evidence should be the driver.

7. Religion, Belief, and Skin in the Game

There are people who as atheists in actions, religious in words and others who are religious in actions, religious in words but there is practically no atheist in both actions and words, completely devoid of rituals, respect for the dead, and superstitions (say a belief in economics, or the miraculous powers of the mighty state and its institutions).

When we look at religion, we should consider what purpose they serve, rather than focusing on the notion of “belief”. In science, belief is literal belief, it is right or wrong, never metaphorical. In real life, belief is an instrument to do things, not the end product.

Judging people by their beliefs is not scientific.

Religion exists to enforce tail risk management across generations, as its binary and unconditional rules are easy to teach and enforce.

8. Risk and Rationality

Survival comes first, truth, understanding, and science later.

“First live, then philosophize” — Hobbes

There is no such thing as the “rationality” of a belief, there is rationality of action. The rationality of an action can be judged only in terms of evolutionary considerations.

There is a difference between beliefs that are decorative and those that map to action.

What is rational is that which allows for survival.

When you consider beliefs in evolutionary terms, do not look at how they compete with each other, but consider the survival of the populations that have them.

Not everything that happens happens for a reason, but everything that survives survives for a reason.

9. The Logic of Risk Taking

100 people gamble a certain set amount each over a set period of time in a casino. If gambler number 28 goes bust, number 29 doesn’t necessarily do so. You can safely calculate that about 1% of gamblers will go bust. And if you keep playing, you will be expected to have about the same ratio, 1% of gamblers going bust, on average, over that same time window.

1 person goes to a casino 100 days in a row, starting with a set amount. If he goes bust on day 28, there is no game no more. No matter how good the gambler is, you can safely calculate that he has 100% probability of eventually going bust. Hence, the probabilities of success from a collection of people do not apply to this gambler.

In a strategy that entails ruin, benefits never offset risks of ruin.

In order to succeed, you must first survive.

Never cross a river if it is on average 4 feet deep.

Sequence matters and the presence of ruin disqualifies cost-benefit analysis.

A situation is non-ergodic when observed past probabilities do not apply to future processes. There is a “stop” somewhere, an absorbing barrier that prevents people with skin in the game from emerging from it — and to which the system will invariably tend. Let us call these situations “ruin”. The central problem is that if there is a possibility of ruin, cost-benefit analyses are no longer possible.

In real life, every single bit of risk you take adds up to reduce your life expectancy, although no single action will have a meaningful effect.

This idea of repetition makes paranoia about some low-probability events, even that seem “pathological,” perfectly rational.

The Thorp, Kelly, and Shannon school of information theory requires that, for an investment strategy to be ergodic, and eventually capture the return of the market, agents increase their risks as they are winning, but contract after losses, a technique called “playing with the house money”. In practice, it is done by threshold, for ease of execution, not complicated rules: you start betting aggressively whenever you have a profit, never when you have a deficit, as if a switch was turned on or off.

Individual ruin is not as big a deal as collective ruin. And of course ecocide, the irreversible destruction of our environment, is the big one to worry about.

Courage is when you sacrifice your own well-being for the sake of the survival of a layer higher than yours.

People confuse risk of ruin with variations and fluctuations. Not all risks are equal. Also, never compare a multiplicative, systemic, and fat-tailed risk to a non-multiplicative, idiosyncratic, and thin-tailed one.

On the polymath’s journey.

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