Antifragility & risk #

Notes on convexity, randomness, and living in a world of thick tails — mostly after Taleb.

Convexity, and the two kinds of people #

Antifragility: what does not enrich you makes you poorer — with time, money, friendship, everything. It all comes down to convex versus concave; convex is simply the opposite of concave. Either you are shrewd or you are a dupe — there is no middle. That is why Fat Tony sorted people only into dupes and non-dupes. There is nothing in between.

Why do things get worse? #

Taleb says that things tend to worsen — wars, for instance. But why? Convexity, and that? Is it mimetic desire? Worth a book?

Risk is probability times consequence #

The proper measure of risk is to multiply probability by consequence. A 0.0001 chance of ruin is not small: if the consequence is ruin — absorbing, the kind you never come back from — then no probability makes it acceptable. This is the thick-tailed domain, where events are interdependent.

Via negativa #

Concentrate on what a thing is not, rather than on what it is. Not everything can be said or explained; the definition is indirect. In practice, in a complex system, it is a matter of what not to do rather than what to do. Less is more, and things can always be added later; removing rarely harms a complex system. Remove what is fragile.

Skin in the game is a filter #

Skin in the game is a filter, because we learn almost nothing from our own mistakes or anyone else’s. Rather, we get eliminated from the environments we don’t fit. By taking risks we find, by trial and error, where we do fit — like a blind man guided by a white stick. And it is the system that learns, not us: it selects those who do not make certain errors. Bad drivers end up in the cemetery — the system selects, not the individual.

When being wrong costs nothing #

Being right or wrong is not what counts. If being wrong costs you nothing, then it doesn’t count.

Diminishing returns #

The law of diminishing returns has something to do with convexity — but what exactly is the link?

Why we don’t learn from history #

Perhaps the reason we don’t learn from history is that each new event is different. Since the world is mostly random, past knowledge cannot help much. Is that the case?

Rename the black swan #

What if the black swan were called a black mammoth — a giant black dinosaur that could swallow you like a fly? It would be far easier to grasp the weight of these random events. And a positive one — why not a goose that lays golden eggs?

Understanding the unknown from the known #

How can we come to understand the properties of the unknown (the infinite) from the known (the finite, the past)? That is: how can we predict the future? The hand that feeds you may be the one that wrings your neck — ask the turkey.

Random, with rules that fit only for now #

It is easier to think of nature as wholly random, with rules that fit only temporarily (the turkey), than to think of hard rules plus the occasional black swan.

The turkey thinks it will live forever #

Take the turkey: it believes it will live forever. But that contradicts nature — nothing lasts forever. Such is the order of things.

Nothing to understand #

There is nothing to understand in the phenomenon of the black swan. The world is random and temporarily in order — like plants, animals and humans: temporarily something in order, but each with an expiry date.

A dupe’s problem #

The black swan, or the turkey, is a dupe’s problem. The butcher knows what will happen to the turkey; the turkey does not. That is exactly why it is a turkey — because it is a dupe.

Slow to build, quick to strike #

Positive black swans are slow to accumulate; the negative ones strike unexpectedly. It is easier to destroy than to build.

Stop fretting #

Stop fretting about everything that might go wrong — things can also turn out well. Who knows? Be wary of everything.

And if the Earth stopped turning? #

And if the Earth stopped turning because of some unknown law — or for no law at all, just like that? It is perfectly possible. Probable? How would you even calculate it?

Piano is tinkering #

Learning the piano is tinkering too: you keep playing, trying new things, and listening — a feedback loop — for what works.