Black Swan is a term coined by the writer to describe events that are unexpected, but yet explainable after the event has happened. It also has a huge impact on our lives which makes it significant but yet unpredictable. An example of this will be the 911 event, World war 2 and also the tsunami crisis in 2004.

Human beings have the tendency of removing blackswan from their predictions (irregardless whether it is market trends, stock maket, populatrity of a book/cd/movie etc..) due to several factors. As you try to predict what might happen tmr (for example, tmr is going to be a fun day because i am attending my friend's birthday party. maybe there is going to surprises at the party which will make things wild and crazy and fun), you will try to imagine it based on the things that you already have knowledge of (in this case the usual birthday parties you have been too) which are actually the known unknown. However, as tmr arrived, you realised there are things that happen which are totally unexpected and cause your initial prediction to be totally off the charts (before you went to the party you broke your leg and had to be sent to teh hospital, or your friend decided to cancel the party because his grandfather just died touch wood touch wood). These would be the unknown unknown. It is due to these random factors that can occur in our lives which causes the black swan effect. Therefore, sometimes having more information cause us to know less about the future for we blinded by what we think we know and lose sight of what we dunno.

Humans which a very interesting nature which is that they tend to be overconfident in whatever they try to predict. An experiment has shown that people that hold high positions in corporation and organisation tend to create a bigger margin of error when asked to predict certain figures.

The effect is particularly significant if it were to happen to something that is extremistan (things that have wide variable like the wealth, income, book sales, deaths in natural disaster, economy data, terrorist incidents) than mediocristan (things that have small variable like height, weight, IQ, car accidents). This is because in extremistan, a random change in figures will cause a huge difference in the average and in the total while for mediocristan it is not so. Like for example there is an earthquake today which caused a total of 100, 000 deaths. This will cause a surge in figures of the total number of people killed by earthquake in that particuar year. Hence in this kind of situation, we are unable and cannot predict what will happen in the future because there is alot of randomness and chance involved.

There is also another cause of blindness in recognising black swan events. We humans tend to simplify things which causes elimination of informations. This is because our brain is made that way in order for us to remember and link things together easily. We tend to try and explain things with reasons that we can think of after it has happened and thus making us believe that everything happened because of something. However, we fail to see that sometimes things can't happen just because of a series of actions we did but due to total randomness.

I think i will be taking a break here... the book is too deep.... will be coming back with simplier sub ideas from this book in the next post. But this is generally what the book is trying to talk about.