Taleb's The Black Swan. Image via Wikipedia
In his Edge Magazine essay Life Is Not A Casino, Nassim Nicholas Taleb, the trader and author (of The Black Swan and Fooled By Randomness) discusses why he no longer thinks that using statistics and probability to make decisions is wise. The problem, he says, is that:
When it comes to low odds, decision making no longer depends on the probability alone. It is the pair, probability times payoff (or a series of payoffs), the expectation, that matters. On occasion, the potential payoff can be so vast that it dwarfs the probability—and these are usually real-world situations in which probability is not computable.
