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View Diary: The Black Swan by Nassim Nicholas Taleb: A review (32 comments)

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  •  The mathematical error is assuming ... (4+ / 0-)
    Recommended by:
    onanyes, 1864 House, Justus, Jane Lew

    ... that every event set 'should' follow a normal distribution curve. That is only true if each event in the set is independent and effectively random. But many event sets are Markov Chains or other structures where prior events do affect probabilities for future events. Modeling a Markov Chain event set as if it were an independent and random (normal distribution) event set yields "fat-tailed" Black Swans.

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