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Tuesday, August 31, 2010

Fooled by Randomness

I just finished reading Fooled by Randomness by Nassim Nicholas Taleb. I read his later book, The Black Swan, and because I enjoyed both his irreverent style and his logical arguments, thought I might also like this book. I did.

In brief, his point is that humans are ruled by their emotions even when they know better, and, in fact, if we did not have our emotions to help guide us, we would find it difficult to make even the most basic decisions. However, we often spend a lot of time fitting random noise in the world, such as the stock market going up or down just a few points, to some seemingly logical story, such as "The market was down today on worries about the job market." We're hard-wired to try to fit facts into causal stories, and then store these stories in our memory rather than the random facts. And when we do this, we can find ourselves in a lot of trouble.

Taleb's book in many ways is a collection of short, highly readable, highly engaging essays, and he spares no effort in skewering what he considers pseudosciences trying to apply the wrong tools and wrong approaches to problems. (He treats economists in particular without mercy.)

Taleb's writing style is very conversational, and even if you don't agree with all of his conclusions, his essays are very engaging and approachable.

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