Q. Lewis, what is a Black Swan Event, and what is its importance in Applied Game Theory (HAGT)?
A. Before I answer this question it may be of value for you to get a basic introduction/simple explanation of the basics of game theory. Below is an article (a 6 minutes read) as well as a more in-depth video. Both were created so they would be understood aby 12-year-old.
The Best Introduction to Game Theory, Simple and Easy to Understand — Written for a 12-Year-Old
Q. Lewis, what is the meaning of game theory?
A. A Black Swan Event is a metaphor that describes an unexpected event (one that comes as a surprise), has a major effect, and is often inappropriately rationalized through various biases with the benefit of hindsight after the fact. The term is based on an old saying that presumed black swans did not exist — a saying that was applied to the experiences of Europeans when they did encounter them.
The theory was developed by Nassim Nicholas Taleb to explain:
1. The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.
2. The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).
3. The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event’s massive role in historical affairs.
Taleb’s “black swan theory” refers only to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences. More technically, in the scientific monograph “Silent Risk”, Taleb mathematically defines the black swan problem as “stemming from the use of degenerate metaprobability (a mistaken expectation based on mathematically calculated predictions and probability analysis). This kind of thinking can make your head grow big, and make your clarity of though small.
This concept existed in mainstream philosophy before Mr. Taleb named it Black Swan Theory? Over the centuries many philosophers addressed the notion of the improbable, by focusing on how general conclusions are often made from specific observations. Taleb’s concept focused not on the long term observation of patterns as many other philosophers did but rather on a basic but radical and unexpected, high impact shift in some process.
Let’ me explain this explain in greater detail. Most ordinary thinkers will observe a Black Swan Event and convince themselves that these unexpected events are explainable in hindsight. Though it is obvious that there will always be a sequence of events that leads to a historical moment, it is not at all obvious that there will also be an unexpected event of such great consequence as to bring about that historical moment.
Using all available knowledge it is impossible to know when an event or any non-linear event might occur. There are times where one may assume, possibly even predict that an unexpected and impactful event will take place. This can be done by experts skilled at extrapolating from variations in statistics combined with past observations.
Of course, this is can this ever be an exact science? Though we can choose to live life systematically there will always be random events that will take place in life that will seem so outside the realm of the possible that it is not even part of our reality to conceive of them. These events are so beyond conventional reason, so without precedent, that the only way to address them is through what is called counterfactual reasoning.
This concept goes beyond the scope of what we are addressing here
Let’s explore the relationship between Black Swan Events, game theory, and our ordinary reality. This can be a complex issue since you are merging logic, the rational, and the intuitive while developing rational strategies. We all create personal realities to expand the subtler elements of our linear realities. Many of us have had the experience of thinking about someone and then the phone rings. It’s them! Is this a coincidence or something a little more esoteric?
I was motivated to write this story when I came across a news article about a metro train in Spijkenisse, near the city of Rotterdam The train had crashed through a barrier at the end of the tracks shortly before midnight on Sunday.
Amazingly, rather than plummeting 10m (32ft) into the water below, the train was left suspended dramatically in the air. How? Well, It ended up delicately balanced on the large sculpture of a whale’s tail at the De Akkers metro station. I. f this is not a Black Swan, I don’t know what is one official told the Dutch national broadcaster NOS on Monday, “We are trying to decide how we can bring the train down in a careful and controlled manner. This attached article has a photograph of the train resting on the whale’s Tail” https://www.bbc.com/news/world-europe-54780430
Other examples include the collapse of the Soviet Union, the development of the personal computer, the collapse of both towers of the World Trade Center on September 11, 2001, and the process and many events that led to the nomination of Barak Obama as the Democratic partys nominee for the U.S. presidency in 2008.
One of the things I find most fascinating about the concept of Black Swan Events is how it has influenced how I deal with expectations in my own life? I am often hyper-focused and generally prepared for some worst-case scenario, which in this case, since I am a game theorist, prepper, and life-hacker, would usually appear to me as a Black-Swan Event.
In each of our lives, we are constantly required to recognize unpredictable forces that may confront us. These forces can be chaotic, and over-whelming. A key element in many cultures is to attribute specific, personal qualities to these forces. The role that these forces play in daily life however is constantly changing as are the beliefs influenced by them. Some forces become more personalized while other are less so. The key is to know who you are and use that for a foundation for action.
So, what is the first step one can take to become more self-aware, and be prepared for Black Swan Events?
It can be an automatic process. In the beginning, it is stimulated by some discomfort. Essentially a conscious person will use trial and error to test and revise their assumptions on any matter that creates discomfort for them. Initially, these may be small discomforts. In time, however, small discomforts that are not addressed may turn into larger issues that can wreak havoc in your life. Initially, anyway, it is best to bring empirical evidence to bear on the beliefs we hold about those things that are most important to us. This awareness combined with faith, clarity of thought, spiritual intention, and the ability to leverage our natural gifts against the influence of unexpected obstacles will help us to survive the worst Black Swan events.
To learn more about the non-linear factor particularly about Black Swan theory I recommend reading the book The Black Swan by Nassim Nicholas Taleb.
I invite you to read, my regular “AskLewis” blogs on game theory, and lifehacking and follow my posts and vlogs throughout the social network:
§ YouTube: The “Asklewis Lewis Harrison” channel,
§ Facebook Fan page: https://www.facebook.com/AskLewis/
§ Facebook Group and Forum: “Lewis Harrison’s Applied Game Theory” https://www.facebook.com/groups/602287903244843/
§ Twitter: @AskLewisH,
§ General Podcast: Tips for Success www.youtube.com/watch?v=4lzIPU0DSiU
§ Contact me at LewisCoaches@gmail.com (I promise to respond to you personally).
§ We offer a customized and personalize Course in Holistic Applied Game Theory: Become more effective, efficient, productive, innovative, and self-aware.
By Ask Lewis.com
Study Holistic Applied Game Theory A-Z and Beyond…2.2. Read the information below