''Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets'' is a book by

Nassim Nicholas Taleb Nassim Nicholas Taleb (; alternatively ''Nessim ''or'' Nissim''; born 12 September 1960) is a Lebanese-American essayist, mathematical statistician, former option trader, risk analyst, and aphorist whose work concerns problems of randomness ...

that deals with the fallibility of human knowledge. It was first published in 2001. Updated editions were released a few years later. The book is the first part of Taleb's multi-volume philosophical essay on uncertainty, titled the '' Incerto'', which also includes '' The Black Swan'' (2007–2010), ''

The Bed of Procrustes ''The Bed of Procrustes: Philosophical and Practical Aphorisms'' is a philosophy book by Nassim Nicholas Taleb written in the aphoristic style. It was first released on November 30, 2010 by Random House. An updated edition was released on Oc ...

'' (2010–2016), '' Antifragile'' (2012), and '' Skin in the Game'' (2018).

Thesis

Taleb sets forth the idea that modern humans are often unaware of the existence of

randomness In common usage, randomness is the apparent or actual lack of pattern or predictability in events. A random sequence of events, symbols or steps often has no order and does not follow an intelligible pattern or combination. Individual ran ...

. They tend to explain random outcomes as non-random. Human beings: # overestimate

causality Causality (also referred to as causation, or cause and effect) is influence by which one event, process, state, or object (''a'' ''cause'') contributes to the production of another event, process, state, or object (an ''effect'') where the cau ...

, e.g., they see elephants in the clouds instead of understanding that they are in fact randomly shaped clouds that appear to our eyes as elephants (or something else); # tend to view the world as more explainable than it really is. So they look for explanations even when there are none. Other misperceptions of randomness that are discussed include: * Survivorship bias. We see the winners and try to learn from them, while forgetting the huge number of losers. * Skewed distributions. Many real life phenomena are not 50:50 bets like tossing a coin, but have various unusual and counter-intuitive distributions. An example of this is a 99:1 bet in which you almost always win, but when you lose, you lose all your savings. People can easily be fooled by statements like "I won this bet 50 times". According to Taleb: "Option sellers, it is said, eat like chickens and go to the bathroom like elephants", which is to say, option sellers may earn a steady small income from selling the options, but when a disaster happens they lose a fortune.

Reaction

The book was selected by '' Fortune'' as one of the 75 "Smartest Books of All Time." '' U.S.A Today'' recounted that many criticisms raised in this book of the financial industry turned out to be justified. ''

Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...

'' described the book as being playful, self-effacing and at times insufferably arrogant, but always thought provoking. ''

The New Yorker ''The New Yorker'' is an American weekly magazine featuring journalism, commentary, criticism, essays, fiction, satire, cartoons, and poetry. Founded as a weekly in 1925, the magazine is published 47 times annually, with five of these issues ...

'' (one of the publications which receives more favourable comments in this book) said that the book was to conventional

Wall Street Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. It runs between Broadway in the west to South Street and the East River in the east. The term "Wall Street" has become a metonym for t ...

wisdom what

Martin Luther Martin Luther (; ; 10 November 1483 – 18 February 1546) was a German priest, theologian, author, hymnwriter, and professor, and Augustinian friar. He is the seminal figure of the Protestant Reformation and the namesake of Lutherani ...

’s ninety-nine '' ic' theses were to the Catholic Church.

Editions

*In 2001, TEXERE published the first edition of the book. (, London : Texere, 2001) *In 2004, TEXERE published a revamped second edition. *In 2005,

Random House Random House is an American book publisher and the largest general-interest paperback publisher in the world. The company has several independently managed subsidiaries around the world. It is part of Penguin Random House, which is owned by Germ ...

published a softback edition with more changes. (, New York : Random house, 2005) *In 2005, a French version appeared, with many unique changes. *The book has been translated into 20 languages,fooled by randomness
/ref> and is reported to have sold over half a million copies. *Further editions have been published by Penguin (softback, May 2007) and Random House (hardback, October 2008.)

References

External links

*
View
on

Google Books Google Books (previously known as Google Book Search, Google Print, and by its code-name Project Ocean) is a service from Google Inc. that searches the full text of books and magazines that Google has scanned, converted to text using optical ...

{{DEFAULTSORT:Fooled By Randomness 2001 non-fiction books Books by Nassim Nicholas Taleb Psychology books Science books Finance books Epistemology literature Books about traders Random House books

Thesis

Reaction

Editions

See also

References

External links