Fooled By Randomness: The Hidden Role of Chance in Life and in the Markets

In the first postscript, Taleb considers what he calls the inverse skills problem. He defines it as the phenomenon whereby the CEO of a company exhibits fewer hard skills than those lower on the company ladder. He classifies skills by presenting a cook as an example. If the cook is incompetent, the result is immediately noticeable in the poor quality of the food they produce. If a CEO is incompetent, the direct correlation to results is more difficult to determine. Taleb implies that what makes a CEO rise to the position has more to do with political savvy than skill. He distinguishes between CEOs and entrepreneurs, noting that the latter demonstrate the full gamut of quantifiable skills. Taleb suggests that randomness plays a crucial role in a CEO’s success, which depends on results rather than processes. Taleb also draws an equivalent between CEOs and elected political officials, arguing that the “contributions of civil servants might be even more difficult to judge than those of the executives of a corporation—and the scrutiny is smaller” (295).

In his second afterthought, Taleb explores “additional benefits of randomness” (296). He begins by asking the reader to imagine a hypothetical scenario in which they attend a dinner in New York City with a suburban commuter. The commuter is so preoccupied with the train schedule that they do not enjoy the dinner, and in this scenario, they cut it short to catch the train. Taleb proposes a modification to the scenario: If the train schedule were less rigid and more random, what would the effect be on the commuter be? Likely, the commuter would spend more time appreciating the meal and less preoccupied with catching the right train. This is one scenario where randomness can provide a benefit. Taleb then discusses the differences between “satisficers” and “optimizers.” The commuter in the above example would be an optimizer. Satisficers, which Taleb discusses in Chapter 11, tend to be better able to find contentment in life. There is enough unpredictability built into their lives and they come to accept and even embrace it. For optimizers, the reverse is true. Taleb suggests that the more one aims at this organizing principle in their lives, one in which nothing but the most optimal situation will suffice, the more likely they are to experience unhappiness. Taleb examines some ways in which he is a satisficer, specifically his decision to do away with an alarm clock. He looks to build gray areas into his schedule rather than be entirely controlled by it. He sees a trend in current society, notably with children being raised to be optimizers as their parents cart them around from one activity to the next on a rigid schedule.

Taleb concludes by saying that he has tried to be concise enough in this section that an MBA would understand it. Borrowing from Rabbi Hillel, who was challenged to winnow his understanding of the Torah down to an axiom that a student standing on one leg would understand, Taleb states his own for the book: “We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract” (301).