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The ludic fallacy, proposed by
Nassim Nicholas Taleb Nassim Nicholas Taleb (; alternatively ''Nessim ''or'' Nissim''; born 12 September 1960) is a Lebanese-American essayist, mathematical statistician, former option trader, risk analyst, and aphorist whose work concerns problems of randomness, p ...
in his book '' The Black Swan'' (
2007 File:2007 Events Collage.png, From top left, clockwise: Steve Jobs unveils Apple's first iPhone; TAM Airlines Flight 3054 overruns a runway and crashes into a gas station, killing almost 200 people; Former Pakistani Prime Minister Benazir Bhutto ...
), is "the misuse of
game A game is a structured form of play, usually undertaken for entertainment or fun, and sometimes used as an educational tool. Many games are also considered to be work (such as professional players of spectator sports or games) or art (su ...
s to model real-life situations". Taleb explains the fallacy as "basing studies of chance on the narrow world of games and dice".Taleb, Nassim (2007). ''The Black Swan''. New York: Random House. p. 309. . The adjective ''ludic'' originates from the Latin noun '' ludus'', meaning "play, game, sport, pastime".Simpson, D.P. (1987). ''Cassell's Latin and English Dictionary''. New York: Hungry Minds. p. 134.


Description

The fallacy is a central argument in the book and a rebuttal of the predictive mathematical models used to predict the future – as well as an attack on the idea of applying naïve and simplified statistical models in complex domains. According to Taleb, statistics is applicable only in some domains, for instance
casino A casino is a facility for certain types of gambling. Casinos are often built near or combined with hotels, resorts, restaurants, retail shopping, cruise ships, and other tourist attractions. Some casinos are also known for hosting live enterta ...
s in which the odds are visible and defined. Taleb's argument centers on the idea that predictive models are based on platonified forms, gravitating towards mathematical purity and failing to take various aspects into account: * It is impossible to be in possession of the entirety of available information. * Small unknown variations in the data could have a huge impact. Taleb differentiates his idea from that of mathematical notions in
chaos theory Chaos theory is an interdisciplinary area of scientific study and branch of mathematics focused on underlying patterns and deterministic laws of dynamical systems that are highly sensitive to initial conditions, and were once thought to have ...
(e.g., the butterfly effect). * Theories or models based on empirical data are claimed to be flawed as they may not be able to predict events which are previously unobserved, but have tremendous impact (e.g., the 9/11 terrorist attacks or the invention of the automobile), also known as
black swan theory The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight. The term is based o ...
.


Examples


Example: Suspicious coin

One example given in the book is the following
thought experiment A thought experiment is a hypothetical situation in which a hypothesis, theory, or principle is laid out for the purpose of thinking through its consequences. History The ancient Greek ''deiknymi'' (), or thought experiment, "was the most anci ...
. Two people are involved: * Dr. John who is regarded as a man of science and logical thinking * Fat Tony who is regarded as a man who lives by his wits A third party asks them to "assume that a coin is fair, i.e., has an equal probability of coming up heads or tails when flipped. I flip it ninety-nine times and get heads each time. What are the odds of my getting tails on my next throw?" * Dr. John says that the odds are not affected by the previous outcomes so the odds must still be 50:50. * Fat Tony says that the odds of the coin coming up heads 99 times in a row are so low that the initial assumption that the coin had a 50:50 chance of coming up heads is most likely incorrect. "The coin gotta be loaded. It can't be a fair game." The ludic fallacy here is to assume that in real life the rules from the purely hypothetical model (where Dr. John is correct) apply. A reasonable person, for example, would not bet on black on a
roulette Roulette is a casino game named after the French word meaning ''little wheel'' which was likely developed from the Italian game Biribi''.'' In the game, a player may choose to place a bet on a single number, various groupings of numbers, the ...
table that has come up red 99 times in a row (especially as the reward for a correct guess is so low when compared with the probable odds that the game is fixed). In classical terms,
statistically significant In statistical hypothesis testing, a result has statistical significance when it is very unlikely to have occurred given the null hypothesis (simply by chance alone). More precisely, a study's defined significance level, denoted by \alpha, is the p ...
events, i.e. unlikely events, should make one question one's model assumptions. In
Bayesian statistics Bayesian statistics is a theory in the field of statistics based on the Bayesian interpretation of probability where probability expresses a ''degree of belief'' in an event. The degree of belief may be based on prior knowledge about the event, ...
, this can be modelled by using a
prior distribution In Bayesian statistical inference, a prior probability distribution, often simply called the prior, of an uncertain quantity is the probability distribution that would express one's beliefs about this quantity before some evidence is taken int ...
for one's assumptions on the fairness of the coin, then Bayesian inference to update this distribution. This idea is modelled in the
Beta distribution In probability theory and statistics, the beta distribution is a family of continuous probability distributions defined on the interval , 1in terms of two positive parameters, denoted by ''alpha'' (''α'') and ''beta'' (''β''), that appear as ...
.


Example: Fighting

Nassim Taleb shares an example that comes from his friend and trading partner, Mark Spitznagel. "A martial version of the ludic fallacy: organized competitive fighting trains the athlete to focus on the game and, in order not to dissipate his concentration, to ignore the possibility of what is not specifically allowed by the rules, such as kicks to the groin, a surprise knife, et cetera. So those who win the gold medal might be precisely those who will be most vulnerable in real life."


Relation to platonicity

The ludic fallacy is a specific case of the more general problem of platonicity, defined by Nassim Taleb as:


See also

* Congruence bias *
Cromwell's Rule Cromwell's rule, named by statistician Dennis Lindley, states that the use of prior probabilities of 1 ("the event will definitely occur") or 0 ("the event will definitely not occur") should be avoided, except when applied to statements that ar ...
* Déformation professionnelle *
Demarcation problem In philosophy of science and epistemology, the demarcation problem is the question of how to distinguish between science and non-science. It examines the boundaries between science, pseudoscience, and other products of human activity, like art ...
* Focusing effect *
Laplace's demon In the history of science, Laplace's demon was a notable published articulation of causal determinism on a scientific basis by Pierre-Simon Laplace in 1814. According to determinism, if someone (the demon) knows the precise location and momentu ...
*
Hindsight bias Hindsight bias, also known as the knew-it-all-along phenomenon or creeping determinism, is the common tendency for people to perceive past events as having been more predictable than they actually were. People often believe that after an event ha ...
*
Unexpected hanging paradox The unexpected hanging paradox or surprise test paradox is a paradox about a person's expectations about the timing of a future event which they are told will occur at an unexpected time. The paradox is variously applied to a prisoner's hanging or ...
* Map-territory relation *
Quasi-empiricism in mathematics Quasi-empiricism in mathematics is the attempt in the philosophy of mathematics to direct philosophers' attention to mathematical practice, in particular, relations with physics, social sciences, and computational mathematics, rather than solely to ...
*
Wicked problem In planning and policy, a wicked problem is a problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize. It refers to an idea or problem that cannot be fix ...
*
Kouska's fallacy ''A Perfect Vacuum'' ( pl, Doskonała próżnia) is a 1971 book by Polish author Stanisław Lem, the largest and best known collection of Stanislaw Lem's fictitious criticism of nonexisting books. It was translated into English by Michael Kande ...


References


External links

{{Nassim Nicholas Taleb Cognitive biases Informal fallacies Nassim Nicholas Taleb