Lord777
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"Black Swans" - these are events, seemingly impossible, but taking place
Human talent is to turn all signals from the environment into meaningful information. This made it possible to create a scientific method, philosophize about the nature of life and invent complex mathematical models.
Our ability to think about and manage the world does not mean that we are good at it. We tend to think narrowly in our ideas about him. Having come to any judgment, we cling to it with a dead grip.
Human knowledge is constantly increasing, and such a dogmatic approach is not effective. Two hundred years ago, doctors and scientists were absolutely confident in their knowledge of medicine, but just imagine that, turning to a doctor with complaints of a runny nose, you are prescribed a prescription for leeches!
Confidence in judgments forces us to deduce concepts outside the framework of the system of concepts that we have accepted as true. How to understand medicine without knowing about the existence of microbes? You can think of a reasonable explanation for the disease, but it will be erroneous due to the lack of important information.
This kind of thinking can lead to unexpected surprises. Sometimes events are surprising, not because they are random, but because our worldview is too narrow. Such surprises are called "black swans" and can force us to reconsider the picture of the world.
Before a person first saw a black swan, everyone assumed that they were only white. White was considered an integral part of them. Seeing a black swan, people radically changed the idea of this bird. Black swans are as common as white swans, and as fatal as bankruptcy due to a fall in the stock market.
Black Swans can have life-changing consequences for those who are blind to them
The black swan effect is not the same for everyone. Some may be seriously affected by it, while others will not even notice it. Access to relevant information is important: the less you know, the greater the risk of falling prey to the black swan.
Example. Imagine that at the races you bet on your favorite horse named Rocket. Because of the horse's physique, list of awards, jockey prowess, and lackluster competition, you are betting all your money on it to win. Now imagine your surprise when the Rocket not only did not run after the start, but chose to just lie down. This is the "black swan". Given the information available, Rocket should have won, but somehow you lost all your money. On the contrary, the owner of Rocket got rich by betting against her. Unlike you, he knew Rocket would go on strike to protest animal cruelty. This knowledge saved him from the "black swan".
The influence of "black swans" can affect not only individuals, but entire societies. In such cases, the "black swan" can change the world, influencing, for example, philosophy, theology and physics.
Example. Copernicus suggested that the Earth is not the center of the universe, and the consequences were colossal: the discovery called into question both the authority of the ruling Catholics and the Bible itself.
Subsequently, this "black swan" laid the foundation for a new European society.
It is very easy to confuse us with even elementary logical errors.
People often make the mistake of making a prediction based on what they know about the past. Thinking that the future is a reflection of the past, we are mistaken, because many unknown factors go against our assumptions.
Example. Imagine that you are a turkey on a farm. Over the years, the farmer has fed, nurtured and nurtured you. Based on the past, there is no reason to expect change. Alas, on Thanksgiving you were beheaded, fried and eaten.
Making predictions based on the past, we are wrong, and this leads to serious consequences. A similar misconception is cognitive bias, when we look for evidence only of pre-existing beliefs.
We do not accept information contrary to what we already believe and are unlikely to conduct further research. But if we decide to figure it out, we will look for sources that dispute this information.
Example. If you firmly believe that "climate change" is a conspiracy, and then see a documentary called "Indisputable Evidence of Climate Change," you are likely to be very upset. And if you search for information on the Internet, in your search terms you will indicate "climate change is a hoax", not "evidence for and against climate change."
That is, we unwittingly draw the wrong conclusions: it is inherent in our nature.
Our brain groups information in a way that makes it difficult to make accurate predictions.
Over the course of evolution, the human brain has learned to classify information in order to survive in the wild. But when we need to learn and quickly adapt to a dangerous environment, this method is completely useless.
The misclassification of information is called false narrative: a person creates linear descriptions of the current situation. Due to the huge amount of information we receive on a daily basis, our brain selects only the one that it considers important.
Example. You probably remember what you ate for breakfast, but you can hardly name the color of the shoes of every passenger on the subway.
To give meaning to information, we link it. So when you think about your life, you mark certain events as meaningful and build them into a narrative that explains how you became who you are.
Example. You love music because your mom sang to you before bed.
It is impossible to fully understand the world in this way. The process works only with an eye to the past and does not take into account the almost limitless interpretation of any event. Even tiny events can have unpredictable, important consequences.
Example. A butterfly flapping its wings in India causes a hurricane in New York a month later.
If we arrange causes and effects in the order of their occurrence, we see a clear, cause-and-effect relationship between events. But since we see only the result - a hurricane - we can only guess which of the simultaneously occurring events actually influenced such an outcome.
It is difficult for us to distinguish between scalable and non-scalable information
We do not distinguish very well between the types of information - "scalable" and "non-scalable". The difference between them is fundamental.
Non-scalable information such as weight or height has a statistical upper and lower limit. That is, the body weight is not scalable, since there are physical limitations: it is impossible to weigh 4500 kg. Limiting the parameters of such non-scalable information allows predictions about mean values.
But non-physical or fundamentally abstract things like wealth distribution or album sales are scalable.
Example. If an album is sold through iTunes, there is no limit to the number of sales: it is not limited to the volume of physical copies. And since the transactions take place online, there is no shortage of physical currency, and nothing stands in the way of selling trillions of albums.
The difference between scalable and non-scalable information is critical to seeing an accurate picture of the world. If rules that are effective for non-scalable information are applied to scalable information, errors will occur.
Example. You want to measure the wealth of the population of England. The easiest way is to calculate wealth per capita by adding up income and dividing it by the number of citizens. However, wealth is scalable: a tiny percentage of the population can own an incredibly large percentage of the wealth.
Per capita income data will not reflect the real state of affairs in your income distribution.
We're too sure of what we think is famous
Everyone wants to keep themselves out of danger. One way is to assess and manage risks. So we buy insurance and try not to put all our eggs in one basket.
Most make every effort to assess risks as accurately as possible, so as not to miss out on opportunities and at the same time not do something that can be regretted. To do this, you need to assess all the risks, and then the likelihood that these risks will materialize.
Example. Let's say you are going to buy insurance, but without wasting money. Then it is necessary to assess the threat of illness or accident and make an informed decision.
Unfortunately, we are convinced that we know all the possible risks from which we must protect ourselves. This is a game error: we tend to react to risk as a game with a set of rules and probabilities that can be determined before it begins.
It is very dangerous to view risk in this way.
Example. Casinos want to make as much money as possible, so they have developed a security system and disqualify players who win too much and often. But their approach is based on a game error. The main threat to the casino is not the lucky ones or the thieves, but the kidnappers who take the casino owner's child hostage, or the employee who has not submitted his income tax return to the IRS. The serious dangers to casinos are completely unpredictable.
It doesn't matter how hard we try. It is impossible to accurately predict any risk.
Why is it necessary to be aware of your ignorance?
By understanding that there is a lot you don't know, you will be better able to assess risks.
Everyone knows the phrase: "Knowledge is power." But when knowledge is limited, it is more profitable to admit it.
By focusing only on what you know, you limit your perception of all possible outcomes of a given event, creating fertile ground for the emergence of the "black swan".
Example. You want to buy shares in a company, but you know too little about the stock market. In this case, you will see several ups and downs, but in general, only notice that the trends are positive. Assuming the situation continues, you spend all your money on stocks. The next day the market crashes and you lose everything you had.
If you studied the topic a little better, you would see numerous ups and downs in the market throughout history. By focusing only on what we know, we are exposing ourselves to serious risks.
Admitting that you don't know something can significantly reduce your risk.
Example. Good poker players know this principle is critical to the success of the game. They understand that their opponents' cards can be better, but they also know that there is certain information that they do not know - for example, the opponent's strategy and the degree of his determination to go all the way.
Aware of the presence of unknown factors, players focus exclusively on their cards, better assessing the possible risks.
Understanding the limitations will help us make the right choice.
The best defense against cognitive traps is to have a good understanding of predictive tools and their limitations. While this may not save you from a miss, it will help reduce the number of bad decisions.
Once you recognize that you are prone to cognitive bias, it is much easier to realize that you are looking for information to support pre-existing claims. Or, knowing that people like to boil things down to clear, causal narratives, you will tend to look for additional information to better understand the big picture.
You need to be aware of your shortcomings.
Example. If you understand that there are always unforeseen risks, despite the promise of an opportunity, you will be more careful about investing heavily in it.
It is impossible to overcome all accidents or our limitations in understanding the complexity of the world, but you can at least mitigate the damage caused by ignorance.
The most important thing
Although we constantly make predictions, we are bad at it. We are too confident in our knowledge and underestimate our ignorance. Failure to understand and define randomness and even our very nature contribute to unsuccessful decision-making and the emergence of "black swans", that is, events that seem impossible and force us to rethink the understanding of the world.
Be suspicious of “because”. Instead of wanting to see events in clear causation, consider a range of possibilities without dwelling on one.
Realize that you don't know something. For meaningful forecasts for the future, whether it is buying insurance, investing, changing jobs, and so on, it is not enough to take into account everything “known” to you - this gives only a partial understanding of the risks. Instead, acknowledge that you don't know something so as not to unnecessarily limit the information you are dealing with.
Human talent is to turn all signals from the environment into meaningful information. This made it possible to create a scientific method, philosophize about the nature of life and invent complex mathematical models.
Our ability to think about and manage the world does not mean that we are good at it. We tend to think narrowly in our ideas about him. Having come to any judgment, we cling to it with a dead grip.
Human knowledge is constantly increasing, and such a dogmatic approach is not effective. Two hundred years ago, doctors and scientists were absolutely confident in their knowledge of medicine, but just imagine that, turning to a doctor with complaints of a runny nose, you are prescribed a prescription for leeches!
Confidence in judgments forces us to deduce concepts outside the framework of the system of concepts that we have accepted as true. How to understand medicine without knowing about the existence of microbes? You can think of a reasonable explanation for the disease, but it will be erroneous due to the lack of important information.
This kind of thinking can lead to unexpected surprises. Sometimes events are surprising, not because they are random, but because our worldview is too narrow. Such surprises are called "black swans" and can force us to reconsider the picture of the world.
Before a person first saw a black swan, everyone assumed that they were only white. White was considered an integral part of them. Seeing a black swan, people radically changed the idea of this bird. Black swans are as common as white swans, and as fatal as bankruptcy due to a fall in the stock market.
Black Swans can have life-changing consequences for those who are blind to them
The black swan effect is not the same for everyone. Some may be seriously affected by it, while others will not even notice it. Access to relevant information is important: the less you know, the greater the risk of falling prey to the black swan.
Example. Imagine that at the races you bet on your favorite horse named Rocket. Because of the horse's physique, list of awards, jockey prowess, and lackluster competition, you are betting all your money on it to win. Now imagine your surprise when the Rocket not only did not run after the start, but chose to just lie down. This is the "black swan". Given the information available, Rocket should have won, but somehow you lost all your money. On the contrary, the owner of Rocket got rich by betting against her. Unlike you, he knew Rocket would go on strike to protest animal cruelty. This knowledge saved him from the "black swan".
The influence of "black swans" can affect not only individuals, but entire societies. In such cases, the "black swan" can change the world, influencing, for example, philosophy, theology and physics.
Example. Copernicus suggested that the Earth is not the center of the universe, and the consequences were colossal: the discovery called into question both the authority of the ruling Catholics and the Bible itself.
Subsequently, this "black swan" laid the foundation for a new European society.
It is very easy to confuse us with even elementary logical errors.
People often make the mistake of making a prediction based on what they know about the past. Thinking that the future is a reflection of the past, we are mistaken, because many unknown factors go against our assumptions.
Example. Imagine that you are a turkey on a farm. Over the years, the farmer has fed, nurtured and nurtured you. Based on the past, there is no reason to expect change. Alas, on Thanksgiving you were beheaded, fried and eaten.
Making predictions based on the past, we are wrong, and this leads to serious consequences. A similar misconception is cognitive bias, when we look for evidence only of pre-existing beliefs.
We do not accept information contrary to what we already believe and are unlikely to conduct further research. But if we decide to figure it out, we will look for sources that dispute this information.
Example. If you firmly believe that "climate change" is a conspiracy, and then see a documentary called "Indisputable Evidence of Climate Change," you are likely to be very upset. And if you search for information on the Internet, in your search terms you will indicate "climate change is a hoax", not "evidence for and against climate change."
That is, we unwittingly draw the wrong conclusions: it is inherent in our nature.
Our brain groups information in a way that makes it difficult to make accurate predictions.
Over the course of evolution, the human brain has learned to classify information in order to survive in the wild. But when we need to learn and quickly adapt to a dangerous environment, this method is completely useless.
The misclassification of information is called false narrative: a person creates linear descriptions of the current situation. Due to the huge amount of information we receive on a daily basis, our brain selects only the one that it considers important.
Example. You probably remember what you ate for breakfast, but you can hardly name the color of the shoes of every passenger on the subway.
To give meaning to information, we link it. So when you think about your life, you mark certain events as meaningful and build them into a narrative that explains how you became who you are.
Example. You love music because your mom sang to you before bed.
It is impossible to fully understand the world in this way. The process works only with an eye to the past and does not take into account the almost limitless interpretation of any event. Even tiny events can have unpredictable, important consequences.
Example. A butterfly flapping its wings in India causes a hurricane in New York a month later.
If we arrange causes and effects in the order of their occurrence, we see a clear, cause-and-effect relationship between events. But since we see only the result - a hurricane - we can only guess which of the simultaneously occurring events actually influenced such an outcome.
It is difficult for us to distinguish between scalable and non-scalable information
We do not distinguish very well between the types of information - "scalable" and "non-scalable". The difference between them is fundamental.
Non-scalable information such as weight or height has a statistical upper and lower limit. That is, the body weight is not scalable, since there are physical limitations: it is impossible to weigh 4500 kg. Limiting the parameters of such non-scalable information allows predictions about mean values.
But non-physical or fundamentally abstract things like wealth distribution or album sales are scalable.
Example. If an album is sold through iTunes, there is no limit to the number of sales: it is not limited to the volume of physical copies. And since the transactions take place online, there is no shortage of physical currency, and nothing stands in the way of selling trillions of albums.
The difference between scalable and non-scalable information is critical to seeing an accurate picture of the world. If rules that are effective for non-scalable information are applied to scalable information, errors will occur.
Example. You want to measure the wealth of the population of England. The easiest way is to calculate wealth per capita by adding up income and dividing it by the number of citizens. However, wealth is scalable: a tiny percentage of the population can own an incredibly large percentage of the wealth.
Per capita income data will not reflect the real state of affairs in your income distribution.
We're too sure of what we think is famous
Everyone wants to keep themselves out of danger. One way is to assess and manage risks. So we buy insurance and try not to put all our eggs in one basket.
Most make every effort to assess risks as accurately as possible, so as not to miss out on opportunities and at the same time not do something that can be regretted. To do this, you need to assess all the risks, and then the likelihood that these risks will materialize.
Example. Let's say you are going to buy insurance, but without wasting money. Then it is necessary to assess the threat of illness or accident and make an informed decision.
Unfortunately, we are convinced that we know all the possible risks from which we must protect ourselves. This is a game error: we tend to react to risk as a game with a set of rules and probabilities that can be determined before it begins.
It is very dangerous to view risk in this way.
Example. Casinos want to make as much money as possible, so they have developed a security system and disqualify players who win too much and often. But their approach is based on a game error. The main threat to the casino is not the lucky ones or the thieves, but the kidnappers who take the casino owner's child hostage, or the employee who has not submitted his income tax return to the IRS. The serious dangers to casinos are completely unpredictable.
It doesn't matter how hard we try. It is impossible to accurately predict any risk.
Why is it necessary to be aware of your ignorance?
By understanding that there is a lot you don't know, you will be better able to assess risks.
Everyone knows the phrase: "Knowledge is power." But when knowledge is limited, it is more profitable to admit it.
By focusing only on what you know, you limit your perception of all possible outcomes of a given event, creating fertile ground for the emergence of the "black swan".
Example. You want to buy shares in a company, but you know too little about the stock market. In this case, you will see several ups and downs, but in general, only notice that the trends are positive. Assuming the situation continues, you spend all your money on stocks. The next day the market crashes and you lose everything you had.
If you studied the topic a little better, you would see numerous ups and downs in the market throughout history. By focusing only on what we know, we are exposing ourselves to serious risks.
Admitting that you don't know something can significantly reduce your risk.
Example. Good poker players know this principle is critical to the success of the game. They understand that their opponents' cards can be better, but they also know that there is certain information that they do not know - for example, the opponent's strategy and the degree of his determination to go all the way.
Aware of the presence of unknown factors, players focus exclusively on their cards, better assessing the possible risks.
Understanding the limitations will help us make the right choice.
The best defense against cognitive traps is to have a good understanding of predictive tools and their limitations. While this may not save you from a miss, it will help reduce the number of bad decisions.
Once you recognize that you are prone to cognitive bias, it is much easier to realize that you are looking for information to support pre-existing claims. Or, knowing that people like to boil things down to clear, causal narratives, you will tend to look for additional information to better understand the big picture.
You need to be aware of your shortcomings.
Example. If you understand that there are always unforeseen risks, despite the promise of an opportunity, you will be more careful about investing heavily in it.
It is impossible to overcome all accidents or our limitations in understanding the complexity of the world, but you can at least mitigate the damage caused by ignorance.
The most important thing
Although we constantly make predictions, we are bad at it. We are too confident in our knowledge and underestimate our ignorance. Failure to understand and define randomness and even our very nature contribute to unsuccessful decision-making and the emergence of "black swans", that is, events that seem impossible and force us to rethink the understanding of the world.
Be suspicious of “because”. Instead of wanting to see events in clear causation, consider a range of possibilities without dwelling on one.
Realize that you don't know something. For meaningful forecasts for the future, whether it is buying insurance, investing, changing jobs, and so on, it is not enough to take into account everything “known” to you - this gives only a partial understanding of the risks. Instead, acknowledge that you don't know something so as not to unnecessarily limit the information you are dealing with.
