Thursday, February 16, 2006

Fooled by Randomness

What is the role of randomness and probability in history?

The above link is to the author's page for the best-selling "Fooled By Randomness" by Wall Street trader and intellectual dissident Nassim Nicholas Taleb. Taleb with his PhD in statistics and probability picks apart the thoughts and life histories of traders working on modern financial markets and exposes the very bounded rationality that conditions history in these markets.

According to Clausewitz [Wikipedia] probability and randomness condition all action and decisions in warfare. The career of Napoleon immediately comes to mind as Taleb discusses trader "blow ups" from over-exposed positions.

The discussion also provides insights into contingent human agency and choice vs. deterministic structure as causal factors in history. A distinction that is central to the work of historians like Braudel and pulitzer prize winning David Hackett Fischer and philosophers of history like Isaiah Berlin.

The author's page has a glossary of fallacies, course materials, and more recent writings. There are several good reviews of the book online [1,2]. Wikipedia has a stub for the book that needs to be expanded.