Taleb at the RSA

May 1, 2007

Just got back from seeing Taleb speak at the RSA. I didn’t stay at the after talk drinks, being too tired from a very early start today. He’s not the most fluent public speaker, but he’s witty and charming, and the anecdotage is good. I scribbled some notes as he spoke…

  • Evolution has wired us for “Mediocristan”: sequences of events that show relatively little variance. Example: out of 1000 people what proportion of the total weight is the heaviest man in the world ? Maybe 0.5%…
  • But we live in a world constructed largely by ourselves, with events that show very high variance. Example: out of a 1000 people what proportion of the total wealth is the richest man in the world ? 99%. That’s “Extremistan”…
  • We produce theories or narratives to explain events instinctively, and they blind us to the true nature of events, because those explanations are geared for Mediocristan.
  • In some domains we can spot incompetence immediately: pilots, chefs, taxi drivers, dentists. In others it’s much harder: CEOs, traders, prime ministers.
  • Volatility isn’t bad per se. What’s important is robustness. Italian govt is volatile but robust. Saudi govt is not volatile, but the regime is not robust.

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