The Black Swan: The Impact of the Highly Improbable

Economists and forecasting:tetlock (2005), makridakis and Hibon (2000), Makridakis et al. (1982), Makridakis et al. (1993), Gripaios (1994), Armstrong (1978, 1981); and rebuttals by McNees (1978), Tashman (2000), Blake et al. (1986), Onkal et al. (2003), Gillespie (1979), Baron (2004), Batchelor (1990, 2001), Dominitz and Grether (1999). Lamont (2002) looks for reputational factors: established forecasters get worse as they produce more radical forecasts to get attention—consistent with Tetlock’s hedgehog effect. Ahiya and Doi (2001) look for herd behavior in Japan. See McNees (1995), Remus et al. (1997), O’Neill and Desai (2005), Bewley and Fiebig (2002), Angner (2006), Bénassy-Quéré (2002); Brender and Pisani (2001) look at the Bloomberg consensus; De Bondt and Kappler (2004) claim evidence of weak persistence in fifty-two years of data, but I saw the slides in a presentation, never the paper, which after two years might never materialize. Overconfidence, Braun and Yaniv (1992). See Hahn (1993) for a general intellectual discussion. More general, Clemen (1986, 1989). For Game theory, Green (2005).

Many operators, such as James Montier, and many newspapers and magazines (such as The Economist), run casual tests of prediction. Cumulatively, they must be taken seriously since they cover more variables.

Popular culture:in 1931, edward Angly exposed forecasts made by President Hoover in a book titled Oh Yeah? Another hilarious book is Cerf and Navasky (1998), where, incidentally, I got the pre-1973 oil-estimation story.

Effects of information:the major paper is bruner and potter (1964). i thank Danny Kah-neman for discussions and pointing out this paper to me. See also Montier (2007), Oskamp (1965), and Benartzi (2001). These biases become ambiguous information (Griffin and Tversky [1992]). For how they fail to disappear with expertise and training, see Kahneman and Tversky (1982) and Tversky and Kahneman (1982). See Kunda (1990) for how preference-consistent information is taken at face value, while preference-inconsistent information is processed critically.

Planning fallacy:kahneman and Tversky (1979) and Buehler, Griffin, and Ross (2002). The planning fallacy shows a consistent bias in people’s planning ability, even with matters of a repeatable nature—though it is more exaggerated with nonrepeatable events.

Wars: Trivers (2002).

Are there incentives to delay?:flyvbjerg et al. (2002).

Oskamp:oskamp (1965) and Montier (2007).

Task characteristics and effect on decision making:shanteau (1992).

Epistémé vs. Techné: This distinction harks back to Aristotle, but it recurs then dies? down—it most recently recurs in accounts such as tacit knowledge in “know how.” See Ryle (1949), Polanyi (1958/1974), and Mokyr (2002).

Catherine the Great:the number of lovers comes from rounding (2006).

Ja fMdx

CHAPTERS 11-13

Serendipity:see Koestler (1959) and Rees (2004). Rees also has powerful ideas on fore-castability. See also Popper’s comments in Popper (2002), and Waller (2002a), Cannon (1940), Mach (1896) (cited in Simonton [1999]), and Merton and Barber (2004). See Simonton (2004) for a synthesis. For serendipity in medicine and anesthesiology, see Vale et al. (2005).

“Renaissance man”:see www.bell-labs.com/project/feature/archives/cosmology/.

Laser:as usual, there are controversies as to who “invented” the technology. After a successful discovery, precursors are rapidly found, owing to the retrospective distortion. Charles Townsend won the Nobel prize, but was sued by his student Gordon Gould, who held that he did the actual work (see The Economist, June 9, 2005).

Darwin/Wallace:quammen (2006).

Popper’s attack on historicism:see popper (2002). note that i am reinterpreting Popper’s idea in a modern manner here, using my own experiences and knowledge, not commenting on comments about Popper’s work—with the consequent lack of fidelity to his message. In other words, these are not directly Popper’s arguments, but largely mine phrased in a Popperian framework. The conditional expectation of an unconditional expectation is an unconditional expectation.

Forecast for the future a hundred years earlier:bellamy (1891) illustrates our mental projections of the future. However, some stories might be exaggerated: “A Patently False Patent Myth still! Did a patent official really once resign because he thought nothing was left to invent? Once such myths start they take on a life of their own.” Skeptical Inquirer, May-June, 2003.

Observation by Peirce:olsson (2006), peirce (1955).