Antifragile by Nassim Nicholas Taleb

 

Summary:

Nassim Nicholas Taleb’s Antifragile is about fragility and it’s converse, antifragility. In fragile systems the benefits are small and visible, and the the side effects are potentially severe and invisible. What Taleb calls the “antifragile” is one step beyond robust, as it benefits from adversity, uncertainty and stressors, just as human bones get stronger when subjected to stress and tension.

A key point he makes is that in our rush to help, fix, or support system, or in other words, ‘do something’, we often make systems more fragile in the long run. He introduces the term iatrogrenic – making things worse by doing something. Taleb is a strong advocate of intervention by subtraction. Instead of finding better cures for diabetes, modify diets to remove sugary foods.

Taleb feels that the major cause of fragility in modern life is lack of ‘skin in the game’ when one set of people become antifragile and transfer the fragility to another set of people. Some examples include managers of large corporations who do well no matter how their company does or the effect it has on the general economy. Politicians who enact complex policies but who are in no way affected by them, and who in fact use this complexity to become highly compensated once they leave office.

Keep an eye out for who is saying and doing things, and how much stake they personally have in whether they are correct. If the answer is zero, or even worse, they are betting against themselves, then they are not to be taken seriously.

Some key points:

– Favor broad diversification so as to reduce negative exposure to any given event.
– Look for optionality; rank things according to optionality, preferably with open-ended payoffs.
– Options that benefit from volatility, disruption, and entropy are the best
– Have ‘skin in the game’, never transfer your fragility to someone else.
– Avoid intervention unless it is completely obvious that lack of intervention in a given critical case is much more dangerous.
– If you generate more than one reason to do something, you’re trying to convince yourself; this is a strong sign to wait or even reject the plan.

Antifragile is part of the Incerto Collection, which includes Taleb’s other books, The Black Swan, Fooled by Randomness, Skin in the Game, and The Bed of Procrustes.