The Great Mental Models Volume 1: General Thinking Concepts

6 discussion topics on which David agrees with Taleb:(1) [p. 286] The sterilized randomness of games does not resemble randomness in real life; thinking it does constitutes the Ludic Fallacy (his neologism). This is exactly right, and mathematicians should pay attention. In my own list of 100 instances of chance in the real world, exactly 1 item is... See more

Second, Pascal’s Wager. You begin with something that’s obvious. But because it’s hard to accept, you have to keep reminding yourself: We don’t know what’s going to happen with anything, ever, over any period. And so it’s inevitable that a certain percentage of our decisions will be wrong. There’s just no way we can always make the right decision. ... See more

Even if their forecasts were true (they aren’t), no individual can get the same returns as the market unless he has infinite pockets and no uncle points. This is conflating ensemble probability and time probability. If the investor has to eventually reduce his exposure because of losses, or because of retirement, or because he got divorced to marry

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These bedazzled methods fall under the category that Futurist Ilkka Tuomi labels as Epistemic Uncertainty , and the argument goes something like this:

“I’m unsure about the answer to this problem, but I can solve it by gathering more data. Once I gather more data related to the problem, I will be able to devise a solution.”

However, as Tuomi astutely... See more