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Fooled by Randomness

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I take this book to be mainly about the expected value (EV) principle, which says that when you make a decision under risk, you should maximize your probability weighted average payoff. The concept of expected value makes only a brief appearance in one chapter, and you won't find a mathematical formula for it anywhere in the book. But as Taleb says, “mathematics is a tool to meditate, not compute,” and most of what he writes in Fooled by Randomness is implicitly a meditation on EV.[1] A natural first question is why we should care about EV or want to maximize it in the first place. If a bet turns out to win you a profit, why does it matter whether the value of taking that bet was positive or negative in expectation? You won, so what more is there to discuss? Or suppose, on the other hand, that you place a bet and lose. Is it really much consolation to be told that your EV was positive? Why should it matter to you that your choice was rational given that it turned out to be wrong? For o

Fooled by Randomness Home About Fooled by Randomness by Nassim Taleb Main points I take this book to be mainly about the expected value (EV) principle, which says that when you make a decision under risk, you should maximize your probability weighted average payoff. The concept of expected value makes only a brief appearance in one chapter, and you won't find a mathematical formula for it anywhere in the book. But as Taleb says, “mathematics is a tool to meditate, not compute,” and most of what he writes in Fooled by Randomness is implicitly a meditation on EV. [1] A natural first ques

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