Antifragility, Robustness, and Fragility, Inside the 'Black Swan' Domain

Nassim Nicholas Taleb

Independent Researcher; NYU-Poly Institute; New England Complex Systems Institute

September 1, 2010

This discussion makes the distinction inside the Fourth Quadrant "Black Swan Domain" between fragile and robust to model (or representational) error on the basis of convexity. The notion of model error as a convex or concave stochastic variable; why deficit forecasting errors are biased in one direction; why large is fragile to errors; how economics as a discipline made the monstrously consequential mistake of treating estimated parameters as nonstochastic variables and why this leads to fat-tails even while using Gaussian models; the notion of epistemic uncertainty as embedded in model errors.

In addition, it introduces a simple practical heuristic to measure (as an indicator of fragility) the sensitivity of a portfolio (or balance sheet) to model error. Finally, it sets an explicit path to conduct policy based on robustness.

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Date posted: August 31, 2010 ; Last revised: July 14, 2012

Suggested Citation

Taleb, Nassim Nicholas, Antifragility, Robustness, and Fragility, Inside the 'Black Swan' Domain (September 1, 2010). Available at SSRN: http://ssrn.com/abstract=1669317 or http://dx.doi.org/10.2139/ssrn.1669317

Contact Information

Nassim Nicholas Taleb (Contact Author)
Independent Researcher ( email )
NYU-Poly Institute ( email )
Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States
New England Complex Systems Institute ( email )
24 Mt. Auburn St.
Cambridge, MA 02138
United States
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