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T HE B L A CK S W AN T he I m p a ct of t h e H I G H LY IM P R O B A B LE Nassim Nicholas Taleb U.S.A. $26.95 Canada $34.95 A B L A CK S W AN is a highly improbable event with three principal characteristics: It is unpre dictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives. Why do we not acknowledge the phenomenon of black swans until after they occur? Part of the answer, according to Taleb, is that humans are hardwired to learn specifics when they should be focused on generalities. We concentrate on things we already know and time and time again fail to take into consideration what we don't know. We are, therefore, unable to truly estimate oppor tunities, too vulnerable to the impulse to simplify, narrate, and categorize, and not open enough to rewarding those who can imagine the "impossible." For years, Taleb has studied how we fool our selves into thinking we know more than we actually do. We restrict our thinking to the irrelevant and inconsequential, while large events continue to surprise us and shape our world. Now, in this reve latory book, Taleb explains everything we know about what we don't know. He offers surprisingly simple tricks for dealing with black swans and ben efiting from them. Elegant, startling, and universal in its applica tions, The Black Swan will change the way you look at the world. Taleb is a vastly entertaining writer, with wit, irreverence, and unusual stories to tell. He has a polymathic command of subjects ranging from cognitive science to business to probability theory. The Black Swan is a landmark book—itself a black swan. NASSIM NICHOLAS TALEB has devoted his life to immersing himself in problems of luck, uncertainty, probability, and knowledge. Part literary essayist, part empiricist, part no-nonsense mathematical trader, he is currently taking a break by serving as the Dean's Professor in the Sciences of Uncer tainty at the University of Massachusetts at Amherst. His last book, the bestseller Fooled by Randomness, has been published in twenty lan guages. Taleb lives mostly in New York. Jacket design: Thomas Beck Stvan Jacket art: £ Photodisk/Getty Images Join our nonfiction e-newsletter by visiting www.rh-newsletters.com Random House New York, N.Y. c 2007 by Random House, Inc. Advance praise for The Black Swan "A masterpiece." —CHRIS ANDERSON, editor in chief of Wired, author of The Long Tail "Recalls the best of scientist/essayists like Richard Dawkins and Stephen Jay Gould." —MICHAEL SCHRAGE, author of Serious Play "A beautifully reflective and opinionated book, illustrated with Calvino- like fables, about the inevitable failure of attempts to reduce the complex ity of the real world to simple black-and-white formulas." — EMANUEL DERMAN, author of My Life as a Quant "A fascinating and challenging critique . .. I thoroughly enjoyed this remarkable author's outside-the-box mix of thought experiments, stories, and epistemology." —El) WAR I) 0. THORP, author of Beat the Dealer "Nassim Taleb challenges us, his readers, to be as fearless as he is in punc turing phony expertise. . . . Read this book." — PHILIP E. TETLOCK, author of Expert Political Judgment "There's more about the ways of the real world between the covers of The Black Swan than in the contents of a dozen libraries." —TOM PETERS, author of M Search of Excellence Praise for Fooled by Randomness "[Fooled by Randomness] is to conventional Wall Street wisdom approxi mately what Martin Luther's ninety-five theses were to the Catholic Church." — MALCOLM GLADWELL, author of Blink "Fascinating . . . Taleb will grab you." —PETER L. BERNSTEIN, author of Against the Gods ISBN 978-1-4000-6351-2 ALSO BY NASSIM NICHOLAS TALEB Fooled by Randomness THE BLACK SWAN RANDOM HOUSE ÛÏQ NEW YORK Copyright © 2007 by Nassim Nicholas Taleb All rights reserved. Published in the United States by Random House, an imprint of The Random House Publishing Group, a division of Random House, Inc., New York. RANDOM HOUSE and colophon are registered trademarks of Random House, Inc. ISBN 978-1-4000-6351-2 LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Taleb, Nassim. The black swan: the impact of the highly improbable / Nassim Nicholas Taleb. p. cm. Includes bibliographical references and index. Contents: Part one—Umberto Eco's antilibrary, or how we seek validation—Part two—We just can't predict—Part three— Those gray swans of extremistan—Part four—The end. ISBN 978-1-4000-6351-2 1. Uncertainty (Information theory)—Social aspects. 2. Forecasting. I. Title. Q375.T35 2007 003'.54—dc22 2006051093 Printed in the United States of America on acid-free paper www.atrandom.com 98 76 Book design by Casey Hampton

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was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas. Taleb, black swans underlie almost everything.