Taleb's The Black Swan. Image via Wikipedia
In his Edge Magazine essay , Nassim Nicholas Taleb, the trader and author (of and ) 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.
