Theory of determinism- everything can be determined with certainty from pervious patterns, accidents never happen and everything is reason basedTheory of randomness- nothing can be determined with 100 % certainty, accidents do happen and everything is not reason based
Mediocristan: many prizesExtremistan: No second prize.Technology, Singers, Movie vs. plays.
Monkey who typed iliadwill not type oddessy
Explains the risk, its impact and role of randomness in risk- Russian roulette George sorrow(how I make so much money by betting against pound)Rakeshjhunjhunwala(how I make so much wealth)..
Normal distribution curve never holds good in actual practicesThere will always be some skewness.There will always be two events A and B, one with high probability of occurrence and other will less probability of occurrence, the one with less probability will have 4 times the impact
Mean, Median, Sigma value, z value, t value ll not be applicable in real life decisions.
Toss a coin for 99 times and if u ll get heads all the times then what is the probability of getting heads on 100th time ?
When investing in stock market we know about company’s financial position as published in leading newspapers and available on internet but sometimes we don’t know managerial problems within the company.
Noise : random change in valuesInformation : change because of some reason
Retired dentist , 241 Vs. 239 time in a day.
In Black Swan he talks about rare event and damage caused by this rare events and also predicts the down fall of the market of 2008-09.In The Bed of Procrustes- Philosophical and Practical Aphorisms. He says we humans, facing limits of knowledge and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas.
Fooled by randomness
Fooled by RandomnessThe Hidden Role of Chance in Life and in the Market By: Nassim Nicholas Taleb Presented By: Nikunj Patel (10029) Piyush Kakkar (10030)
Nassim Nicholas TalebAn MBA from Wharton and a PhD from the University of Paris.He is currently a Distinguished Professor of Risk Engineering atNew York Universitys Polytechnic Institute and Visiting Professorof Marketing (Cognitive Science) at London Business School.
Outline of the bookBook is divided in three parts:• Part 1: Solon’s Warning• Part 2: Monkey’s on Typewriters• Part 3: Wax in My Ears
Part 1: Solon’s Warning• Introduces the concept of randomness and rare events (the black swan)• Explains the understanding of human beings towards randomness• Explains the impact of these rare events
Part 2: Monkey’s on Typewriters• Explains the human biasness towards the randomness• Explains the luck factor and probability blindness of human beings
Part 3: Wax in My Ears• How human beings deal with the uncertainties/randomness