Nassim Nicholas Taleb on Black Swans
EconTalk
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The Moral Error in Models
We like linear models ecause they're simple and bad. Extreme stan is that lenor. We gon o odds ar gong to come ofp with the wong model, ok? So your moral error increases in extreme istand. If i have an ice cube on the floor, and i ask you to predict, well, ows a, you know, little bit of a totle of wateris going to belike. You will probably come up with an idea of howa step to will look like when it melts. Sa, when it melts, exactly after it melts, ok. Now, if i show you water on the floor,. try tod figure out
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