Fooled by Randomness

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
Author Nassim Nicholas Taleb
Language English
Genre Statistics, Philosophy, Finance
Publisher Random House
Publication date
2001
Pages 316
ISBN 0-8129-7521-9
OCLC 60349198
123/.3 22
LC Class HG4521 .T285 2005
Followed by The Black Swan
Website www.fooledbyrandomness.com

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets is a book by Nassim Nicholas Taleb that deals with the fallibility of human knowledge. The book is part of Taleb's four volume philosophical essay on uncertainty, titled the Incerto and covers the following books: Antifragile (2012), The Black Swan (2007–2010), Fooled by Randomness (2001) and The Bed of Procrustes (2010).

Thesis

Taleb sets forth the idea that modern humans are often unaware of the existence of randomness. They tend to explain random outcomes as non-random.

Human beings:

  1. overestimate causality, e.g., they see elephants in the clouds instead of understanding that they are in fact randomly shaped clouds that appear to our eyes as elephants (or something else);
  2. tend to view the world as more explainable than it really is. So they look for explanations even when there are none.

Other misperceptions of randomness that are discussed include:

Reaction

The book was selected by Fortune as one of the 75 "Smartest Books of All Time."[1] U.S.A Today recounted that many criticisms raised in this book of the financial industry turned out to be justified.[2] Forbes admitted to the book being playful, self-effacing and at times insufferably arrogant, but always thought provoking.[3] The Wall Street Journal (one of the publications that Taleb pokes fun at in his book) called Universa Investments' buys in October 2008 a "Black Swan gain" (alluding to the Black Swans mentioned in the book).[4] The New Yorker (one of the publications which receives more favourable comments in this book) said that the book was to conventional Wall Street wisdom what Martin Luther’s ninety-nine [sic] theses were to the Catholic Church.[5]

Editions

See also

References

  1. Useem, Jerry (21 March 2005). "The Smartest Books We Know". Fortune.
  2. Mouton, Andre (19 August 2013). "Does big data have us 'fooled by randomness'?". U.S.A Today. Retrieved 28 August 2013.
  3. Sizemore, Charles (23 January 2013). "Nassim Taleb's 'Antifragile' Celebrates Randomness In People, Markets". Forbes.com. Retrieved 28 August 2013.
  4. Patterson, Scott (3 November 2008). "October Pain was Black Swan Gain" (PDF). Wall Street Journal. Retrieved 28 August 2013.
  5. "Book review : Fooled by randomness". The New Yorker. Retrieved 28 August 2013.
  6. fooled by randomness

External links

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