The Black Swan

Book Presentation Presentation by Pradeep

“The world will not evolve past its current state of crises by using the same thinking that created the situation” ….. Albert Einstein

Pradeep-XYZ

Music Irregular Fracture Disorder

Chaos

Failure

Roughness Error err…

Risk

NoiseImperfect

Crises Complex

Unknown

IrrationalUnlucky

Theme

Pradeep-XYZ

Connect the dots

Pradeep-XYZ

Contents What is a Black Swan ? The World Today Problem of induction and biases We just can’t predict Aesthetics of randomness Conclusion- Lessons from The Black Swan

Pradeep-XYZ

What is a Black swan ? History behind the title (Once upon a time in

Europe) Highly improbable (difficult to predict- an

outlier) Highly Consequential Retrospective ( see it coming!)

Pradeep-XYZ

Examples 9/11 Oct. 19, 1987 Harry Potter Computer Internet iPod (10 years back) Google(15 years back)

Pradeep-XYZ

The world today Extremistan Vs Mediocristan1

The Flat World (Globalised and interconnected with Web)

Recursive (The Harry Potter effect)

Pradeep-XYZ

Mediocristan Vs Extremistan

[ Height, Weight, IQ] [ Wealth, Book Sales, Hits]

Pradeep-XYZ

Mild Randomness Wild Randomness

Problem of induction

Pradeep-XYZ

Biases Behavioral Economists- irrationality (Daniel

Kahneman and Amos Tversky1) Confirmation bias2

Narrative fallacy3

Silent evidence Fight with the pecking order Ludic fallacy4

Pradeep-XYZ

System 1 and System 2 (Biases) System 1 : Experiential one, effortless,

automatic, fast, Opaque, parallel-processed and can lend itself to errors

System 2 : the cognitive one (thinking), reasoned, effortful, slow, logical, serial and self aware

Pradeep-XYZ

Economist.com – what’s your choice ?

Pradeep-XYZ

Economist.com- what’s wrong ?

Pradeep-XYZ

Narrative fallacy (Biases)

A BIRD IN THE THE HAND IS

WORTHTWO IN THE BUSH

Pradeep-XYZ

We just cant predict Examples Track record – Philip Tetlock’s research1 and

WWII Attitude towards prediction2 ? (I don’t know

Vs Guesstimation) Tools of predictions (Bell curve-extremistan

and Spreadsheet-anchoring) Serendipitous world (Sextus empiricus) &

Complex world (Sensex and Swine flu) What to do when you can’t predict ?

Pradeep-XYZ

Examples on prediction errors Computer (IBM) Telephone Beatles (expectation) Recent economic recession Tsunami Charles Darwin’s “The origin of species”

paper

Pradeep-XYZ

“This telephone has too many shortcomings to be seriously considered as a means of communication.

The device is inherently of no value to us.”

(Western Union memo, 1876)

Pradeep-XYZ

“I think there’s a world market for maybe five computers.”

(Thomas Watson, Chairman of IBM, 1943)

Pradeep-XYZ

"Everything that can be invented has been invented." -- Charles H. Duell, Commissioner, U.S. Office of Patents, 1899.

Pradeep-XYZ

“We don’t like their sound and guitar music is on the way out.”

(Decca Recording Company rejecting the Beatles, 1962)

Pradeep-XYZ

Aesthetics of randomness From Mediocristan to Extremistan Challenges with Bell-curve Fractal Geometry (aka Geometry of nature)

Pradeep-XYZ

Mediocristan to Extremistan The economics of superstars1

Cumulative advantage (Academic citations) Lingua franca2 (Zipf’s law) The Long Tail- Chris Anderson Globalisation (Reason behind recent

recession ?)

Pradeep-XYZ

The aesthetics of randomness Benoit Mandelbrot ( Rock star of

Mathematics- Author- (Mis) behavior of markets)

Fractal Geometry or Geometry of Nature (irregularity, Chaos )

What’s common (Connect Dots ?) (Music, Literature, Markets, Sociology, Temples, Nature, Star wars graphics)

Symmetry, Scalable2 , exponential1 80/20 or 50/01

Pradeep-XYZ

Pradeep-XYZ

Pradeep-XYZ

Fractals captured in camera…

Pradeep-XYZ

Indian Temples

Pradeep-XYZ

Animated fractal mountain

Pradeep-XYZ

The End

“Our knowledge can only be finite, while our ignorance must necessarily be infinite.”…Karl Popper

Pradeep-XYZ

Appendix

Pradeep-XYZ

What to do when you can’t predict ? Being a fool in the right places (be human) Be prepared (Barbell strategy) The idea of positive accident (love to fail as

Americans do)

Pradeep-XYZ

Time Scale

Pradeep-XYZ