We have reached chapter 12 of our reading calendar.
Here Taleb continues ellaborating on how to apply the idea of antifragility in daily life, based on the idea of keeping options.
The concept that strikes me the most is his reinterpretation of the famous story on how Thales used his knowledge to become rich. I found it brilliant how Taleb challenges the usual interpretation by Aristotle, that so far everybody took for granted and gives one that sounds more accurate and twists the idea of rational based decision.
It is quite difficult to believe that Thales was able to predict the weather months in advance. It is a lot more reasonable that what Thales did was to exploit an asimetry of options:
Thales had the right -but not the obligation- to use the olive presses in case there would be a surge in demand; the other party had the obligation, not the right. Thales paid a small price for that privilege, with a limited loss and a large possible outcome.
And that’s the main point of this whole chapter. We can be stupid; we don’t to understand what’s going on, we just need to find options and asymmetry. The best way to do it, is natural selection style, to always choose the outcome that gives as more options and then just watch for assymetries we can use for our profit, without having to understand how the asymmetry came in the first place. All you need is “The wisdom to no do unintelligent things to hurt yourself”.
Next he deals with the idea of dispersion, one of the main properties of options. As as example, he points out how for writers and thinkers, having a small group number of people, dispersed and distributed, that are fanatic about their work is much better than a homogenous grup that fairly like it and how having a majority of people disliking their work doesn’t count -“as there is no such thing as the opposite of buying your book”. A similar thing happens with business based on selling luxury goods: you don’t care about how much money the average people has, your target are the richest ones.
Some of the ideas of this chapter reminded me of the famous post by Kevin Kelly, 1000 True Fans that have it developed from other perspective, but reaching similar conclusions.
He uses the word “tinkering” to refer to this general process of getting as much options as possible with small errores and large gains, without having to understand the reasons behind in, Thales style. As we’ll see in later chapters this idea of tinkering plays a central role in some deep implications of the book.
Thaleb next takes another incursion against common economics and present us with the ludic fallacy: the idea that random events in real life can be treated with the probabilistic mathematics used for dice and casinos. But, as we readers of Antifragile and The Black Swan know, probabilities and random events in real life are much much different than their domesticated brothers in the casino.