IDK if you've read the book or not, but in case you haven't I'd recommend this summary of Mediocristan and Extremistan [0]. Mediocristan and Extremistan are Ta

IDK if you've read the book or not, but in case you haven't I'd recommend this summary of Mediocristan and Extremistan [0]. Mediocristan and Extremistan are Talebs analogies for domains with different underlying mechanics (for lack of a better word). I'm going cut some corners here, but to keep it short, the phenomena in Mediocristan can be modeled by using gaussian probability distributions (weight, height etc.), while the phenomena in Extremistan are better modeled using power law distributions, that have so called fat-tails. (wealth, land ownership) One of the central arguments of the book is that people have been using tools from Mediocristan in Extremistan and that's what leads to these Black Swan phenomen, which in turn might have potentially ruinous effects. One example he uses is a now defunct hedge fund called Long Term Capital Management (LTCM) [1]. My (poor) understanding of what led to LCTMs ruin (and required the Federal Reserve to intervene) is that they used some fundamentally Gaussian techniques to model derivatives. The models predicted certain events to have a lot lower probability to occur than what was actually the case (fat-tails). Underestimating these outliers combined with the fact that the firm was highly leveraged, was ultimately what went wrong and had potentially disastrous effects on the financial markets. [0]: https://people.wou.edu/~shawd/mediocristan--extremistan.html https://people.wou.edu/~shawd/mediocristan--extremistan.html [1]: https://en.wikipedia.org/wiki/Long-Term_Capital_Management https://en.wikipedia.org/wiki/Long-Term_Capital_Management