Risk, Rationality, and Survival: Why Playing It Safe Isn’t Always Smart

What does it mean to be rational? Nassim Taleb challenges the traditional view, arguing that rationality is best defined by survival outcomes, not abstract logical consistency. Decisions that promote survival—even if seemingly illogical—are truly rational.

Central to this understanding is ergodicity, a concept distinguishing between averages over time and across populations. Ignoring ergodicity leads to catastrophic errors, especially in finance where the ruin of one cannot be offset by gains elsewhere.

Risk-taking emerges as a necessity, not a gamble. Some risks must be embraced to grow and thrive, while others must be prudently avoided. Balancing these forces is the essence of practical rationality.

Choosing the path of risk with courage, tempered by caution, allows individuals and societies to navigate uncertainty effectively. This new lens on rationality offers powerful guidance for making decisions that matter.

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