Black swan theory

Rare card · No. 47258

The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term arose from a Latin expression which was based on the presumption that black swans did not exist. The expression was used in the original manner until around 1697 when Dutch mariners saw black swans living in Australia. After this, the term was reinterpreted to mean an unforeseen and consequential event. The reinterpreted theory was articulated by Nassim Nicholas Taleb, starting in 2001, to explain: The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, economics, and technology. The non-computability of the probability of consequential rare events using scientific methods (owing to the very nature of small probabilities). The individual and collective psychological biases...

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