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The Great Game Theory Guide: Lesson # 3 — Solving Black Swan Events
For an introduction and simple explanation of the basics of game theory please read Lesson #1
Q. Lewis, what is a Black Swan Event, and what is its importance in Applied Game Theory (HAGT)?
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. 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).
