People tend to simplify the cause of Black Swans (unexpected, rare events that have a big impact) after they happen and forget about all the factors that actually caused them. Complex systems are perceived as random due to a lack of available information. This is called Platonifying, after the Greek philosopher Plato. The mind creates an illusion of understanding complex things by making them seem orderly and predictable. These outliers are usually due to pure chance but because their circumstances are unique, they often become even larger than when they started out. The normal bell curve distribution doesn’t account for extreme outliers and therefore will shift if one occurs.

It’s so uncommon that it can’t be predicted with the normal bell curve distribution and as a result, people tend to think of reasons for why these events happen after they occur.

Key TakeawaysĪ Black Swan is an extremely rare event that happens beyond what we would normally expect. It’s also important to be humble about what you know and understand that predictions aren’t always accurate. The best way to withstand a Black Swan event is to avoid taking unnecessary risks, as well as balancing risk by diversifying one’s portfolio. The human mind also has difficulty comprehending randomness versus chaos, which is due entirely to chance or might obey an unknown organizing principle. They prefer to invent a narrative that makes the unpredictable seem predictable in retrospect, but they can’t predict it because of complexities and externalities. Professionals who study extreme events often have trouble predicting them. A fractal model is a better option for these types of data sets because it includes the inequality of specific subsets of that data without those extreme observations. For example, wealth or creative work distributions are not normally distributed because they include huge outliers like Black Swans. These Black Swans cannot be predicted by such models. In fact, predictive models rely on data from the past and that data can bias models against unforeseeable events.

Such events are so improbable that they’re unpredictable, but people often try to fit them into a causal narrative after the fact in order to make history appear more organized than it really is. The Black Swan by Nassim Nicholas Taleb is a philosophical treatment of his research into highly improbable, high-impact events. 1-Page Summary of The Black Swan Overview

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