Treating real-world uncertainty as if it had the clean, enumerable probabilities of a game.
Taleb's term. Casino odds are known and enumerable; real risk is neither, so a risk model that presents itself as a game is smuggling in the thing that most needs questioning.
In practice
- A risk register that assigns probabilities to five named scenarios has quietly asserted that the list is complete.
- A trading model that performs beautifully in backtest is playing a game whose rules were written by the past.
- Further reading
- Wikipedia
- Subject
- Decision-making & Reasoning
- Essay
- The catalogue of predictable errors