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ROLE OF EXPECTATIONS

      That is, nobody expected the Soviet Union to crumble at this point in time. One of the most crucial aspects of Black Swans is that they are always measured against expectations and prior knowledge. This is an underappreciated point. As noted, most people use the term loosely, largely equating it with high‐impact outcomes that were somehow shocking to us. With the considerable difference, perhaps, that calling it a Black Swan provides an air of complete unpredictability and that, therefore, one is not to be blamed for what just happened. Getting tail risk wrong may be an indictable offense. But Black Swans? They seem to absolve everyone of any responsibility for what went down, because nobody could have seen it coming.

      The habit mentioned earlier of equating Black Swans with ‘mere’ tail risk misses out on what is perhaps its most important dimension, namely the expectations we had going into the situation. Because of the role of expectations, what is a Swan to you may not be one to me. It is, in Taleb's preferred terminology, a ‘sucker's problem'. Naïve and ignorant individuals are more prone to experience Black Swans simply because they fail to form realistic expectations. To illustrate this idea, Taleb uses the example of a turkey somewhere in the US as Thanksgiving approaches. Having walked about generously fed for its entire life, the turkey is unsuspecting of the calamity that is about to befall it. The butcher, however, is obviously not unsuspecting, and he is therefore not in for a Black Swan – exactly the same event, but wildly diverging expectations.

      However, casual observation suggests that most of us have not reached such a state of immaculate wisdom. Many do not read books and have never heard of connectivity. All of our egocentric biases make going into denial about pandemics the easiest thing in the world, something which Albert Camus, the French philosopher, understood well:

      At any rate, even if we had read about pandemics and realized that the probability of another one is clearly not zero, there is something about the magnitude of the consequences. Just like the ‘business‐as‐usual’ risk, Black Swans have two dimensions: possibility and consequence. Granting the possibility of something is a binary situation: a recognition that such a thing could happen (as opposed to saying there is no way it ever could). Even if we are willing to entertain the possibility of something, we could still be suckers with respect to the consequences once the event is unleashed. This is why C‐19, for most people, was a genuine Black Swan. Pandemics, sure, I think I heard about that in school. But who could have imagined entire countries shutting down? Spending months on end in lock‐downs? Tourism coming to a near stand‐still? Mad dashes – knife fights even – for toilet rolls? It would take a pretty serious student of history, and one with a very fertile imagination at that, to envision the severity of the consequences along so many paths. Therefore, for a substantial majority of the planet's inhabitants, C‐19 was a Black Swan. Along the same lines, it would be questionable not to label the French Revolution with its decidedly wild consequences a Black Swan just because there had been revolutions prior to that.

      When it comes to the possibility of something happening, history by now offers a pretty impressive palette of different types of events. We might think of these as ‘known unknowns’, as it is clearly within our reach to form an understanding of them. What even the most creative and superbly educated mind cannot envision, however, is the magnitude of the consequences of those events as they would play out in the present day. The dynamics are truly impossible to imagine, and hence the consequences. History only repeats itself for the most part. With respect to the consequences, most of us are suckers, especially when it comes to our own lives and times. Whenever something impactful but entirely conceivable hits our vicinity, we are stunned no matter what.

      This ‘because I'm special' protective mechanism goes a long way in setting the stage for Black Swans. However, it is only one of the many ways in which our outlook is warped, which brings us to the long catalogue of biases that have been identified and described by scholars. A bias can be said to be a predisposition to make a mistake in a decision‐making situation, because it leads us away

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