Nonlinearity

24Feb08

“Nonlinearity in random outcomes is sometimes used asa tool to break stalemates. Consider the problem of the nonlinear nudge. Imagine a donkey equally hungry and thirstly placed at exactly equal distances from two sources of food and water. In such a framework, he would die of both thirst and hunger, as he would be unable to decide which one to get to first. Now inject some randomness in the picture, by randomly nudging thw dokey, causing him to get closer to one source, no matter which and accordingly away from the other. The impasse would be instantly broken and our happy donkey would be either in turn well fed than well hydrated, or well hydrated than well fed.”

Fooled by randomness, Taleb Nassim

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