The Black Swan: The Impact of the Highly Improbable

This is where you learn from the minds of military people and those who have responsibilities in security. They do not care about “perfect” ludic reasoning; they want realistic ecological assumptions. In the end, they care about lives.

I mentioned in Chapter 11 how those who started the game of “formal thinking,” by manufacturing phony premises in order to generate “rigorous” theories, were Paul Samuelson, Merton’s tutor, and, in the United Kingdom, John Hicks. These two wrecked the ideas of John Maynard Keynes, which they tried to formalize (Keynes was interested in uncertainty, and complained about the mind-closing certainties induced by models). Other participants in the formal thinking venture were Kenneth Arrow and Gerard Debreu. All four were Nobeled. All four were in a delusional state under the effect of mathematics—what Dieudonné called “the music of reason,” and what I call Locke’s madness. All of them can be safely accused of having invented an imaginary world, one that lent itself to their mathematics. The insightful scholar Martin Shubik, who held that the degree of excessive abstraction of these models, a few steps beyond necessity, makes them totally unusable, found himself ostracized, a common fate for dissenters.[63]

If you question what they do, as I did with Merton Jr., they will ask for “tight proof.” So they set the rules of the game, and you need to play by them. Coming from a practitioner background in which the principal asset is being able to work with messy, but empirically acceptable, mathematics,

TABLE 4: TWO WAYS TO APPROACH RANDOMNESS