Black Swan
Black Swan
Earliest Reference
Thle earliest known reference to the term black swan occurs in the Roman poet Juvenal’s poem Satire VI, in which he describes potential qualities of a woman worthy of marriage, “a rare bird in the world, very similar to the black swan.” At the time, black swans were presumed not to exist. All swans were presumed to be white because all historical records of swans showed them with white feathers. The term black swan was thus used to describe any impossible event or circumstance.
But in 1697 the Dutch explorer Willem de Vlamingh encountered swans with dark plumage in Australia, a land largely unexplored by Europeans at that time. The black swan thus came to be a metaphor for the reality that just because something has not happened does not mean that it cannot occur in the future.
Black Swan Events?
Nassim Nicholas Taleb, a professor, economist, and writer, initially explored black swan events in the context of financial markets in the early 21st century and then expanded his scope to include historical, scientific, and other events.
Taleb describes a black swan event as having three attributes:
a)It is an outlier—i.e., it is so rare that even the possibility that it might occur is unknown.
b)It has an extreme impact when it occurs.
c)In spite of its outlier status, explanations are created for it after the fact, making it predictable in the future.
Such events can be classified as positive, as in the case of the sharp rise of the Internet, or negative, as in the subprime mortgage crisis in 2007–08.
Why Black Swan Events occurs?
Taleb argues that, while human beings are good at turning environmental stimuli into meaningful information, they tend to be narrow-minded in their beliefs about the world. Being dogmatic about beliefs makes humans blind to concepts that fall outside what is accepted as true. This creates a vulnerability to surprise events called black swans, which necessitate a change in worldview.
Two tendencies cause humans to be particularly susceptible to black swan events. The first is creating narratives based on what is known of the past, and the second is the notion that the past is a reliable predictor of the future.
Impact on the World?
Black swan events impact people differently based on the extent of their access to relevant information about such events: the more the information, the less the impact.
Compiled by
Ms Naresh kuwar
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