The Black Swan: The Impact of the Highly Improbable · chapter 6 · id the-black-swan-c6-01-we-should-focus-on-the-consequ
“We should focus on the consequences of events (payoffs) rather than their probability, because we are terrible at estimating probability but can bound consequences. This is the foundation of robustness.”
VERIFIEDconfidence: high⚠ extracted by pipeline, re-audit pending
Receipts
Taleb (2020), Statistical Consequences of Fat Tails, STEM Academic PressFLAGGED: DOI not in registry
Under fat tails, the expected value of a function of a random variable depends more on extreme observations than on central tendency. Focus on payoff structure, not probability estimation.
Kahneman & Lovallo (1993), 'Timid Choices and Bold Forecasts', Management ScienceDOI registry: valid
Decision-makers consistently overweight probability estimates and underweight the magnitude of consequences in risky decisions.
This claim is a stable, citable object. If you can falsify a verdict, tell us. Corrections are loud here.