My new program. There is a systematic way to capture the difference between the mathematical properties of the “real world” and those of the “academic” one (in the bad sense of the word), or the difference between “textbooks” and “reality”, and even track the effects of too much certainty in a belief system. It looks like model errors, model uncertainty, and overconfidence lead to underestimation of fat tails, and we know where to correct for it.
For instance we know that the law of large numbers requires MORE observations that what we find in textbooks, etc.
via My new program. There is a systematic… – Nassim Nicholas Taleb | Facebook.