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IN_DEFENSE_OF_NERDS


                                             April 22, 2008

                                             BLACK_SWAN

       "Do nerds tunnel, meaning,
       do they focus on crisp
       categories and miss
       sources of uncertainty?"
             -- p.181



Consider the case of Tony the Trader from Brooklyn,
vs. Tobias the math nerd of Wall Street.

Taleb's anecdote about them is cute:

An interviewer asks Tobias what the
odds are that an unrigged coin will
come up heads after a streak of
99 tails-- Tobias answers with a
textbook 50/50, but Tony the Trader
claims there's less than 1% chance
it'll come up heads: obviously the      Myself, I would cut Tobias some
coin really is rigged.           slack: he gave a text book answer in
                                        the context of a text book question.
Were Tobias actually asked
to bet in that situation, we                 The question that Taleb
don't know what he would say.                asked sounds like the
                                             traditional ones used to
In contrast, Taleb praises                   get at the problem of
Tony for his ability to "think               The Gamblers Fallacy.
outside the box", which in
this case means a refusal to                     Taleb makes it sound like
take an abstraction seriously.                   he's going one way, then
This is interesting -- but                       complains about the silly
Tony's answer is insane just                     nerd taking the bait,
in practical terms:                              not anticipating that
                                                 Taleb was about to change
   If you conclude that the coin is              the subject.
   rigged, *under no circumstances*
   should you bet on the outcome of
   the next coin flip.

   Someone capable of swapping in a
   rigged coin once is capable of
   swapping in a different one later,      As is typical with me
   just as soon as they've convinced       reading Taleb: I constantly
   smart guys like Tony that they          find myself tempted to
   know what's going on.                   complain about minutiae
                                           like this.

                                           I don't think Taleb can
                                           talk for two paragraphs
                                           without saying something
                                           dubious.
                      LOOSE_FEATHERS
                                           The question is always:
                                           is this just quibbling
                                           about detail, or does it
                                           address the main point?

                                              It's often hard for me to tell.
                                              Sometimes if you drill down and
                                              collect enough little details
                                              they *do* lead somewhere...
                                              and sometimes not.

      To continue with the
      Defense of the Nerds:

      These people are often the
      generators of the Black
      Swans that Taleb likes to
      talk about.

         He praises the intelligent management
         of a high tech company that let's
         it's researchers work on what they
         want, in hopes that one or two will
         come up with a big result that pays
         for the entire effort.

             Doesn't Taleb understand
             that this is a strategy
             for herding nerds?  That
             nerds are the productive
             engine of this enterprise
             he's praising?

                          It is also not a *new*
                          strategy -- it may currently
                          be practiced at google,
                          but it was previously used
                          at 3m, and I think parts of
                          IBM and Xerox, and no doubt
                          Bell Labs, etc.

                              It meets with mixed success:
                              Xerox famously managed to
                              "invent the personal
                              computer", and then couldn't
                              think of what to do with it.

                              And IBM has given up on
                              the disk drive business,
                              despite having invented a
                              lot of the key
                              technologies (e.g. the
                              magneto-resistive head).


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