Critically read and write a review of The Black Swan : The Impact of the Highly Improbable by Nassim Nicholas Taleb

The Black Swan: The Impact of the Highly Improbable
by
Nassim Nicholas Taleb
Random House 2007

Since the economy began to falter in Summer 2008, the press in news briefings and commentaries has given considerable exposure to the negative role of quants in the near collapse of the entire financial system. Two examples of these articles discussed in class are
1)Risk Mismanagement: WERE THE MEASURES USED TO EVALUATE WALL STREET TRADES FLAWED? OR WAS THE MISTAKE IGNORING THEM?, J. Nocera, New York Times Magazine Cover Story January 4, 2009
2)Buffett Accepts Blame and Faults Others, D. Segal, NY Times, March 1, 2009, Page A19

The definition of quant as given in The Black Swan (page 19) is:
A quant is a brand of industrial scientist who applies mathematical models of uncertainty to financial (or socioeconomic) data and complex financial instruments. (P 19).
In his book Mr. Taleb references/discusses a wide range of quantitative topics and tools that we will be discussing in this course including:
TopicPage(s)
Confidence Intervals138-140
Optimization, Game Theory184
Linear Regression186-187
Randomness197-198
Network Theory226
Normal Distribution231
Standard Deviation, 239, 250
Mean Deviation249

Your assignment is to critically read and write a review of The Black Swan (you can skim chapters 16 18). Your review should include a general overview of the position the book takes and in light of the material covered in this class give your opinion as to whether Mr. Taleb has made his case. In supporting your position please include a detailed analysis (i.e. explain the example and why you agree or disagree) of five specific examples from the list below that the author uses in the book to prove his point. (If you prefer to use other examples to demonstrate your point please feel free to do so but make sure you cite the page(s) on which the example appears.)

Sample Examples
1.Statistical Example Bottom of Page 53
2.Counting to 3- Page 58
3.Human nature, Happiness and Lumpy rewards Starting page 91
4.Rat example- Pages 107-108
5.Beginners luck- Pages 109-110
6.Coin Flip- Page 124
7.Fire Hydrant- Pages 144-146
8.Econometrics and Economists- Pages 154-156
9.Why deadlines are not met- Pages 156-157
10.Advice- Page 205
11.Casino Environment- Page 238

See

http://online.wsj.com/article/SB10001424052748704879704575236771699461084.html?mod=WSJ_hpp_LEFTWhatsNewsCollectiokn
called stock market meltdown on May 6, 2010 a black swan.

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