BLACK SWAN Theory

Black Swan Theory is a philosophical and mathematical theory founded by Nassim Nicholas Taleb. It describes randomness and uncertainty. The theory was described in Taleb's book The Black Swan: The Impact of the Highly Improbable. It's name originates in the assumption in Medieval Europe that black swans could not exist, when in fact, they are rare, but do exist.

According to the Black Swan Theory, unpredictable events are much more common than people think and are the norm and not the exception. Taleb believes that the more educated people are, the more likely it is that they incorrectly believe these unpredictable events are uncommon. Taleb says that because of an information overflow in today's society, we often don't interpret data accurately and create correlations that are not always relevant, when randomness more often is the rule. Taleb does not believe in the expertise of bankers or financial analysts and say that society incorrectly believe that they can predict the future.

Fact:Theory founded by Nassim Nicholas Taleb
Fact:Taleb is a former Wall Street trader who was born in Lebanon
Fact:Describes randomness and uncertainty
Fact:According to Taleb, unpredictable events are more common than people think

Focus of the 2007 book ''The Black SwanThe Impact of the Highly Improbable by Taleb

Fact:Often applied to the crisis in market capitalism
Fact:In Western society, Black swans used to be a metaphor for something that could not exist, until it was discovered that they did exist

Fact:Black swans were discovered in the 17th century