judgement
The Problem Of Induction
The rule
No pile of proof ever makes a rule certain, yet one exception can break it. A thousand white swans prove nothing; one black swan settles it.
Where it flips
Push this to the extreme and you distrust all evidence and all track records, until you can act on nothing. So use data to rule ideas out, not to bless them. A long record cannot prove safety, but a broken record can still prove danger.
Seeing a thousand white swans does not prove all swans are white. One black swan settles it forever. A stock that has risen every year for ten years has proven nothing about next year. The long record of good behaviour is exactly what makes the turkey feel safest, the day before it is slaughtered. So treat a long clean record as a reason to look harder for what could break it, not as a promise.
A worked example
Aayra buys a finance company because it has grown its profits for eight years straight. But the very smoothness that reassured her was hiding rising debt. In year nine it unravelled. [illustrative]
How to spot it
- ·'it has never happened before'
- ·a long unbroken streak treated as proof
- ·comfort growing just as the risk quietly builds
Nassim Nicholas Taleb · Fooled by Randomness