Hello friends,

A black swan is a rare unexpected event. Black swans can be positive or negative. There are ways to account for this problem including an understanding of The Lucretius Problem, factoring in a Margin of Saftey, and having skin in the game. 

In The Black Swan: The Impact of the Highly Improbable, Nassim Taleb offers a definition of a black swan

Nassem Taleb writes:

an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact…. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

Black swans are the inevitable byproduct of complex adaptive systems. Think about the world as a collection of interactions between components that are generally predictable but not always.

Knowing the behaviors of the individual part can allow you to extrapolate the behavior of the group most of the time. However, it won’t allow you to predict the behavior of each interaction. Occasionally these interactions will produce something unexpected and result in non-linear and non-predictable behavior.

One of the biggest mistakes that people make with black swans comes with a big impact. 

A lot of people think that when outcomes occur outside of their expectations that the result is a black swan. This reasoning causes the belief that the outcome could not have been foreseen because they didn’t foresee it. While this reasoning loop relaxes our brain and allows us to avoid feedback, it also ensures that we are not learning how the world really works. We become close-minded.

Just because something is outside of our expectations does not make it a black swan._ Joe Sehrawat


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Main Image Credit: Photo by Photo by Photo by Kev Kindred on Unsplash

Get in touch… — JOE’s LIFE SKILLS LAB/Joe Sehrawat

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