In “Meditations on Extremistan,” Nassim Taleb discusses the concept of extreme events and their impact on various phenomena, using examples from finance, human height, and behavioral economics. Taleb emphasizes that while extreme deviations cannot be completely ruled out, they are unlikely in certain phenomena without compelling explanations based on physical processes or energy. He criticizes the assumptions of Gaussian distributions and rationality in Behavioral Economics and discusses the importance of understanding probability and dynamics in the real world. Taleb also shares his views on mental accounting, the misunderstanding of probability and risk, and the impact of extreme events on probability and variance. Throughout the video, Taleb expresses skepticism towards theories that underestimate the impact of extreme events and emphasizes the importance of considering the long-term consequences of decisions.
One note to add here is that they are both right. Since the future is binary in games and option trading, negative probability has to exist. In time and space however, the future is not a fixed outcome.
