Monday, January 19, 2009

#53. Essay at

This is an interesting essay I found while surfing the net.

Nassim Nicholas Taleb (2008). The fourth quadrant. A map of the limits of statistics.

The main point is that mind habits (got by osmosis or lack of deep understanding) obtained in ordinary statistics courses are dangerous in decision-making with extreme value distributions. The text leans towards the role of extreme events in wrong risk assessment leading to the current economic crisis.

Although the point of view is strictly probabilistic, there is a resonance with some important ideas behind `alternative' uncertainty modelling. For instance,

"Are we using models of uncertainty to produce certainties?"

"Given a set of observations, plenty of statistical distributions can correspond to the exact same realizations—each would extrapolate differently outside the set of events on which it was derived."

If you find the essay interesting: in the last SMPS, Dominique Guyonnet gave a keynote lecture on possibilistic risk analysis for enviromental decisions which is very nice to follow. The paper is in the conference proceedings.


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