The titular concept of antifragility uses examples from science and mathematics to argue that some systems are strengthened by encounters with disorder, and to link sensitivity to disorder to nonlinear responses and optionality. Centrally, Taleb views antifragility as a nonlinear response linked to
Jensen's Inequality. He summarized the gist of his book in a letter to
Nature: "Simply, antifragility is defined as a
convex response to a stressor or source of harm (for some range of variation), leading to a positive sensitivity to increase in
volatility (or variability, stress, dispersion of outcomes, or uncertainty, what is grouped under the designation "disorder cluster"). Likewise, fragility is defined as a concave sensitivity to stressors, leading to a negative sensitivity to an increase in volatility. Taleb's thesis is that in a volatile world with a lot of destructive uncertainty, the wise economic strategy is to be antifragile: protect the downside but prepare to benefit disproportionately from potential external negative events and in all cases avoid fragility. An everyday example of this strategy contrasts a highly paid executive with an expensive lifestyle and debts (fragile, highly vulnerable to unemployment which could be catastrophic) with a self-employed taxi driver with no debt (resilient, unlikely to suffer an economic disaster). To move on to becoming antifragile then requires a combination of low fixed obligations with making small bets that have asymmetric payoffs. Taleb applies these concepts to a range of economic and philosophical situations with the thesis that while the modern world is full of fragility (deriving from debt, technology and economic structures that encourage obligations, leading to a reliance upon external circumstances remaining predictable and unchanging), older societies were better at managing risk with lessons for life, public policy and economic choices. Building on these ideas, Taleb develops the following themes, including examples of where individuals may be making themselves antifragile at society's or other people's expense.
Skin in the game To have "
skin in the game" is to have incurred risk by being involved in achieving a goal. Taleb extends the definition to include any risk so that "Every captain goes down with every ship". This removes the
agency problem or in other words, the "Situation in which the manager of a business is not the true owner, so he follows a strategy that cosmetically seems to be sound, but in a hidden way benefits him and makes him antifragile at the expense (fragility) of the true owners or society. When he is right, he collects large benefits; when he is wrong, others pay the price. Typically, this problem leads to fragility, as it is easy to hide risks. It also affects politicians and academics. A major source of fragility." Taleb's following book,
Skin in the Game: Hidden Asymmetries in Daily Life, furthers the idea, asserting it is necessary for fairness, commercial efficiency, and risk management, as well as necessary to understand the world.
Via negativa Via negativa is a type of theological thinking that attempts to describe God by negation or in other words, by what God is not. Taleb expanded this definition to include more generally the focus on what something is not, in action, what to avoid or what not to do. Avoiding the doctor for minor illnesses or removing certain food from one's diet to improve health are examples.
Lindy effect Technology, or anything nonperishable, increases in life expectancy with every day of its life. So, a book that has been in print for a hundred years is likely to stay in print for another hundred years. The opposite is
neomania, a love of change for its own sake, a form of
philistinism that does not comply with the Lindy effect and that understands fragility. Forecasts the future by adding, not subtracting. "This gets at the idea that a supposed understanding of an investment rationale, a narrative, or a theoretical model is unhelpful in practical trading."
Early occurrences An early occurrence of this fallacy is found in the ancient story of
Thales.
Aristotle explains that Thales reserved presses ahead of the
olive harvest at a discount only to
rent them out at a high price when
demand peaked, following his predictions of a particularly good harvest. Aristotle attributes Thales' success to his ability to correctly forecast the weather. However, it was not his ability to forecast that made Thales successful but that "Thales put himself in a position to take advantage of his lack of knowledge… that he did not need to understand too much the messages from the stars… that was the very first
option on record". ==Impact ==