

Probability and Risk in the Real World [pdf] - platz
https://dl.dropboxusercontent.com/u/50282823/chaptersprobability.pdf

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pella
GMO risk

Taleb: _" Genetically Modified Organisms, GMOs. Top-down modifications to the
system (through GMOs) are categorically and statistically different from
bottom up ones (regular farming, progressive tinkering with crops, etc.) To
borrow from Rupert Read, there is no comparison between the tinkering of
selective breeding and the top-down engineering of taking a gene from a fish
and putting it into a tomato. Saying that such a product is natural misses the
statistical process by which things become “natural”.

What people miss is that the modification of crops impacts everyone and
exports the error from the local to the global. I do not wish to pay —or have
my descendants pay — for errors by executives of Monsanto. We should exert the
precautionary principle there —our non-naive version — simply because we would
discover errors after considerable damage."_

[http://blog.longnow.org/02013/07/08/the-artangel-
longplayer-...](http://blog.longnow.org/02013/07/08/the-artangel-longplayer-
letters-nassim-taleb-writes-to-stewart-brand/)

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stiff
Crank science time!

What I think he is doing, he is basically taking his philosophical musings,
finds concepts from very high level mathematics that seem corresponding,
buries it all under a mountain of formalism introduced for no particular
reason and then... does absolutely nothing with it. He will plug in some
numbers or show some trivial (except for the mountain of formalism) inequality
as a supposed mathematical "proof" of his revelations. I don't think he
himself understands the mathematics he attempts to write about.

If you would like, for a change, to look at a "probability in the real world"
book that would make any actual sense, and by someone who has used probability
theory successfully in practice, have a look at "The Art of Probability" by
Richard Hamming, the inventor of coding theory. He treats things like
robustness of models to violation of assumptions that are not often found in
other books, and he uses only calculus, although as opposed to Mr Taleb he
actually is able to do derivations.

~~~
oskarth
He got his PhD in the pricing of derivatives, and wrote the book Dynamic
Hedging almost 20 years ago, far before he started with his so called
"philosophical musings".

If you are gonna criticize someone, it would be better to criticize something
that person has said rather than calling him a crank.

That aside, the book you posted seems interesting indeed.

[http://www.amazon.com/Dynamic-Hedging-Managing-Vanilla-
Optio...](http://www.amazon.com/Dynamic-Hedging-Managing-Vanilla-
Options/dp/0471152803/)

~~~
stiff
The thing with cranks is that there is really nothing to criticize, the words
just don't make any sense - terminology is misused or invented and not
explained, formalism is introduced without apparent reason, established best
practices for communication are not followed (like stating your objectives and
conclusions from your work) and so forth. I mean, what the hell is this
supposed to mean I can't even imagine:

 _Definition 1.

A rule is a decision-making heuristic that operates under a broad set of
circumstances. Unlike a theorem, which depends on a specific (and closed) set
of assumptions, it holds across a broad range of environments which is
precisely the point. In that sense it is stronger than a theorem for decision-
making._

This is outright nonsense, if he doesn't understand what a theorem is, how can
he possibly understand Lebesgue integration and functional analysis?

~~~
oskarth
His attitude on academica and proofs are different from most contemporary
researchers/scholars, something that he has talked about extensively in his
books and other writings. Being well-read in the classics and spending a lot
of his time on the trade floor probably has something to do with it. As
hackers I think this attitude isn't that far off, when it comes to the
hacker/compsci "divide".

While I see your point about the quote, I think his intent of the definition
is very clear. If you are curious and want to know what he means by something,
he's very active on both facebook and twitter.

As a specific example, you have probably heard of the saying "premature
optimization is the root of all evil". This is a rule which holds in pretty
much any domain. It's obviously not a theorem, but you can still talk about
the _payoff_ of the rule. This is what Taleb means when he says "probability
in the real world" \- it's all about payoffs and consequences.

~~~
tensor
I haven't read the book, but your justifications here send up as many red
flags as the quote you are addressing. First, a proof is either valid or it is
not. You cannot have a "different view" on this. Second, there is no
hacker/compsci divide. Terms like 'the real world' are used solely to demean
the work of another person and offer nothing useful.

Your example is especially frightening. You cannot build proofs on weak rules-
of-thumb. In fact, it is difficult to even quantify values surrounding
heuristics like the one you give. There simply is no valid data.

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mrcactu5
In the stock market, probability theory is (mis)used to model the typical
random behavior of the market, as Nassim Taleb as seen many times.
[http://en.wikipedia.org/wiki/Black%E2%80%93Scholes](http://en.wikipedia.org/wiki/Black%E2%80%93Scholes)
[http://www.bbc.co.uk/news/magazine-17866646](http://www.bbc.co.uk/news/magazine-17866646)

frequentist probability seems like an okay tool for the stock market, but
these who knows if the motion of stocks are correctly separated into "drift"
and "noise" by Ito processes or whatever model they choose

Rare events - "risk" \- can and will occur if we leave a process running
sufficiently long, and sooner than we predict. This is Taleb's "Black Swan".

Game-theoretic strategies seem better here, playing stocks off each other
accounting for the "black swan" as much as we can.

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pella
taleb: "New link (Dropbox had too much traffic) "

[http://www.fooledbyrandomness.com/chaptersprobability.pdf](http://www.fooledbyrandomness.com/chaptersprobability.pdf)

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alexscheelmeyer
New url for those getting 404 :
[http://www.fooledbyrandomness.com/chaptersprobability.pdf](http://www.fooledbyrandomness.com/chaptersprobability.pdf)

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pella
Nassim Nicholas Taleb : "comments are welcome on the aesthetics of this LaTeX
formatted technical companion (available for free). The book is half
converted."

[https://www.facebook.com/permalink.php?story_fbid=1015172601...](https://www.facebook.com/permalink.php?story_fbid=10151726010213375&id=13012333374)

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knodi
getting a 404.

~~~
pella
taleb: "New link (Dropbox had too much traffic) "

[http://www.fooledbyrandomness.com/chaptersprobability.pdf](http://www.fooledbyrandomness.com/chaptersprobability.pdf)
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