Nassim Taleb and Daniel Kahneman discusses Antifragility



give me a LIKE if you came to this thread thinking you were intelligent, watched a couple minutes of this video, realized that you are just an average joe after all. I have no fucking clue clue what these guys are talking about half the time.

if someone can explain to me that turkey story at 0:24:00 I'll be forever thankful.. because I have no fucking clue what a turkey with increased statistical confidence is.
 
EvilPenguin said:
give me a LIKE if you came to this thread thinking you were intelligent, watched a couple minutes of this video, realized that you are just an average joe after all. I have no fucking clue clue what these guys are talking about half the time.

if someone can explain to me that turkey story at 0:24:00 I'll be forever thankful.. because I have no fucking clue what a turkey with increased statistical confidence is.
Click to expand...

Didn't watch the video yet, but I'll take a stab at the turkey story because I'm familiar with Taleb and I think I can explain it, let me know if anything is not clear.

(sorry it's kind of long, I added a tldr)

1. You make predictions about the future based on your past experiences. For instance, you might drive through green lights without checking that the other cars have actually stopped at the red light to make it safe for you to cross, because in your experience, you have always driven through green lights safely.

2. Even though crossing through intersections is never 100% safe, people act like it is... they say, "It's always been safe, so it must be safe and I can assume that is will always be this way."

3. Operating on these assumptions about the future works most of the time, but the all the times when driving through a green light was safe doesn't disprove the possibility of someone running a red light and crashing into you.

4. Some might run a red light and cause an accident 0.01% of the time, but when it does happen it is so disruptive (destroys cars, kills people, etc) that the 0.01% or less occurrence is still very significant.

5. The turkey story takes this a step further, because even though you might not consider the danger of driving through green lights, you can still imagine it. Black swan events are so unpredictable that you can't even come close to predicting them, yet, like someone running a red light and crashing into you, they are immensely significant.

So, the turkey can not imagine that the farmer would kill him. It is so different from everything he's ever experienced that it doesn't even enter into the realm of possibilities, yet it is a possibility and when it happens it is extremely significant (the turkey loses his life).

Taleb puts this theory into practice through his hedge fund. His fund tries to make investments that take into account the existence of crazy, impactful and completely unpredictable events. While it's impossible by definition to bet on a black swan event, they believe that they can maximize exposure to black swan events in the market. The end result is that the fund continuously loses small amounts of money, but theoretically has a chance for huge profit when the market is thrown into unforeseen chaos.

The other real world application is minimizing exposure to black swan events. Taleb has a whole theory of the kind of conservative lifestyle that accomplishes this goal, but I don't remember it all of the top of my head.

tldr; just because things look great doesn't mean you're not one bad break from everything collapsing.
 
pinchyfingers said:
Didn't watch the video yet, but I'll take a stab at the turkey story because I'm familiar with Taleb and I think I can explain it, let me know if anything is not clear.

(sorry it's kind of long, I added a tldr)

1. You make predictions about the future based on your past experiences. For instance, you might drive through green lights without checking that the other cars have actually stopped at the red light to make it safe for you to cross, because in your experience, you have always driven through green lights safely.

2. Even though crossing through intersections is never 100% safe, people act like it is... they say, "It's always been safe, so it must be safe and I can assume that is will always be this way."

3. Operating on these assumptions about the future works most of the time, but the all the times when driving through a green light was safe doesn't disprove the possibility of someone running a red light and crashing into you.

4. Some might run a red light and cause an accident 0.01% of the time, but when it does happen it is so disruptive (destroys cars, kills people, etc) that the 0.01% or less occurrence is still very significant.

5. The turkey story takes this a step further, because even though you might not consider the danger of driving through green lights, you can still imagine it. Black swan events are so unpredictable that you can't even come close to predicting them, yet, like someone running a red light and crashing into you, they are immensely significant.

So, the turkey can not imagine that the farmer would kill him. It is so different from everything he's ever experienced that it doesn't even enter into the realm of possibilities, yet it is a possibility and when it happens it is extremely significant (the turkey loses his life).

Taleb puts this theory into practice through his hedge fund. His fund tries to make investments that take into account the existence of crazy, impactful and completely unpredictable events. While it's impossible by definition to bet on a black swan event, they believe that they can maximize exposure to black swan events in the market. The end result is that the fund continuously loses small amounts of money, but theoretically has a chance for huge profit when the market is thrown into unforeseen chaos.

The other real world application is minimizing exposure to black swan events. Taleb has a whole theory of the kind of conservative lifestyle that accomplishes this goal, but I don't remember it all of the top of my head.

tldr; just because things look great doesn't mean you're not one bad break from everything collapsing.
Click to expand...

thanks for the explanation bud, I get it now. He got me confused when he started talking about the different turkey departments..
 
EvilPenguin said:
give me a LIKE if you came to this thread thinking you were intelligent, watched a couple minutes of this video, realized that you are just an average joe after all. I have no fucking clue clue what these guys are talking about half the time.
Click to expand...
There are a lot of very smart people out there that can teach a lot.

EvilPenguin said:
if someone can explain to me that turkey story at 0:24:00 I'll be forever thankful.. because I have no fucking clue what a turkey
with increased statistical confidence is.
Click to expand...
>> http://www.wickedfire.com/shooting-shit/171406-10k.html#post2010657 <<
 
pinchyfingers said:
Didn't watch the video yet, but I'll take a stab at the turkey story because I'm familiar with Taleb and I think I can explain it, let me know if anything is not clear.

(sorry it's kind of long, I added a tldr)

1. You make predictions about the future based on your past experiences. For instance, you might drive through green lights without checking that the other cars have actually stopped at the red light to make it safe for you to cross, because in your experience, you have always driven through green lights safely.

2. Even though crossing through intersections is never 100% safe, people act like it is... they say, "It's always been safe, so it must be safe and I can assume that is will always be this way."

3. Operating on these assumptions about the future works most of the time, but the all the times when driving through a green light was safe doesn't disprove the possibility of someone running a red light and crashing into you.

4. Some might run a red light and cause an accident 0.01% of the time, but when it does happen it is so disruptive (destroys cars, kills people, etc) that the 0.01% or less occurrence is still very significant.

5. The turkey story takes this a step further, because even though you might not consider the danger of driving through green lights, you can still imagine it. Black swan events are so unpredictable that you can't even come close to predicting them, yet, like someone running a red light and crashing into you, they are immensely significant.

So, the turkey can not imagine that the farmer would kill him. It is so different from everything he's ever experienced that it doesn't even enter into the realm of possibilities, yet it is a possibility and when it happens it is extremely significant (the turkey loses his life).

Taleb puts this theory into practice through his hedge fund. His fund tries to make investments that take into account the existence of crazy, impactful and completely unpredictable events. While it's impossible by definition to bet on a black swan event, they believe that they can maximize exposure to black swan events in the market. The end result is that the fund continuously loses small amounts of money, but theoretically has a chance for huge profit when the market is thrown into unforeseen chaos.

The other real world application is minimizing exposure to black swan events. Taleb has a whole theory of the kind of conservative lifestyle that accomplishes this goal, but I don't remember it all of the top of my head.

tldr; just because things look great doesn't mean you're not one bad break from everything collapsing.
Click to expand...
Very in-depth explanation but a lot of works to convey the simplicity of it. (Nassim has the same problem)

A turkey believes itself to be safe until the day it's head is chopped off. Because the turkey lived a safe, nice life, it believed it had no reason to evaluate the risk of a head chop. Then, Chop.

Humans evaluate risk in the same way in belief that our currency is safe and the sun will rise. Black Swans fuck shit up.
 
blureach said:
Very in-depth explanation but a lot of works to convey the simplicity of it. (Nassim has the same problem)

A turkey believes itself to be safe until the day it's head is chopped off. Because the turkey lived a safe, nice life, it believed it had no reason to evaluate the risk of a head chop. Then, Chop.

Humans evaluate risk in the same way in belief that our currency is safe and the sun will rise. Black Swans fuck shit up.
Click to expand...

Yea, since I didn't watch the video, I wasn't sure what he could be confused about, so I figured I better spell it all out.
 
guerilla said:
Read Antifragile. It's wonderful.
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Agreed. Antifragile is the most influential book that I have read this year.

I would be willing to bet that a lot of the WF community already understands many of the principles shared on a gut level, but reading this and having the big picture events better defined, probabilities better understood (or realizing that they are useless in some cases) really helped me focus on the long term picture for my businesses.

I believe that the increased understanding of risk provided by this book will make me a LOT of money over the years. Read it.
 
blureach said:
Very in-depth explanation but a lot of works to convey the simplicity of it. (Nassim has the same problem)

A turkey believes itself to be safe until the day it's head is chopped off. Because the turkey lived a safe, nice life, it believed it had no reason to evaluate the risk of a head chop. Then, Chop.

Humans evaluate risk in the same way in belief that our currency is safe and the sun will rise. Black Swans fuck shit up.
Click to expand...
This is mostly correct but maybe not as precise as I feel comfortable with.

Humans tend to evaluate risk linearly.

Risk however is non-linear.

So the Turkey sees a pattern of consistent (linear) behavior, and then creates future expectations that the behavior will stay linear.

When the day comes that the Turkey is killed to be eaten, it is a black swan (unforeseen event) but only for the Turkey. The farmer always knew he was going to kill the Turkey. It wasn't a black swan for the farmer.

hth
 
guerilla said:
This is mostly correct but maybe not as precise as I feel comfortable with.

Humans tend to evaluate risk linearly.

Risk however is non-linear.

So the Turkey sees a pattern of consistent (linear) behavior, and then creates future expectations that the behavior will stay linear.

When the day comes that the Turkey is killed to be eaten, it is a black swan (unforeseen event) but only for the Turkey. The farmer always knew he was going to kill the Turkey. It wasn't a black swan for the farmer.

hth
Click to expand...

What if the Turkey knew his head would be chopped off one day because he had seen the turkeys before him disappear, or heard their head chopping screams coming from the barn. He lived in fear for years but alas, he's a turkey so there wasn't shit he could do about it.
 
cheshire said:
What if the Turkey knew his head would be chopped off one day because he had seen the turkeys before him disappear, or heard their head chopping screams coming from the barn. He lived in fear for years but alas, he's a turkey so there wasn't shit he could do about it.
Click to expand...
Sort of misses the entire point.

The turkey problem is one of linear expectations combined with a worldview which doesn't account for black swans (unforeseen events).

Here is an example where humans act like Turkeys.

"Real Estate always goes up in value"
 
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