A black swan is an outlier, an event that lies beyond the realm of normal expectations. Most people expect all swans to be white because that's what their experience tells them; a black swan is by definition a surprise. Nevertheless, people tend to concoct explanations for them after the fact, which makes them appear more predictable, and less random, than they are. Our minds are designed to retain, for efficient storage, past information that fits into a compressed narrative. This distortion, called the hindsight bias, prevents us from adequately learning from the past. •"Black swans" are highly consequential but unlikely events that are easily explainable – but only in retrospect.
• Black swans have shaped the history of technology, science, business and culture.
• As the world gets more connected, black swans are becoming more consequential.
• The human mind is subject to numerous blind spots, illusions and biases.
• One of the most pernicious biases is misusing standard statistical tools that ignore black swans, such as the "bell curve."
• Other statistical tools, such as the "power-law distribution," are far better at modeling many important phenomena.
• Expert advice is often useless.
• Most forecasting is pseudoscience.
• You can retrain yourself to overcome your cognitive biases and to appreciate randomness. But it's not easy.
• You can hedge against negative black swans while benefi ting from positive ones.