Nassim Nicholas Taleb on the fourth quadrant
Edge published a new essay by Nassim Nicholas Taleb, author of the ‘The Black Swan: The Impact of the Highly Improbable’, called The Fourth Quadrant: A Map of the Limits of Statistics:
If small probability events carry large impacts, and (at the same time) these small probability events are more difficult to compute from past data itself, then: our empirical knowledge about the potential contribution—or role—of rare events (probability × consequence) is inversely proportional to their impact. This is why we should worry in the fourth quadrant!
Taleb concludes by making the point that few people feel comfortable with limits to our knowledge and ability to predict the future:
Spyros Makridakis and I are editors of a special issue of a decision science journal, The International Journal of Forecasting. The issue is about “What to do in an environment of low predictability”. We received tons of papers, but guess what? Very few addressed the point: they mostly focused on showing us that they predict better (on paper). This convinced me to engage in my new project: “how to live in a world we don’t understand”.
Categories: Science, Society