None of the concepts presented in this book were new to me. My highschool philosophy/calculus teacher first explained the "rare event" argument as the "chicken parable" (a chicken leaves the henhouse and gets fed by a farmer for 1000 days straight, and on the 1001th day runs out and has his head cut off). Mental shortcuts and their associated risks were discussed in both compsci (algorithms vs. heuristics) and cognitive psych (stereotyping as adaptive behaviour). Basic probability and confidence inidicators were outlined in my introductory statistics course (having slept through most of the classes, I missed many details but managed to absorb the key principles). Finally, evo bio helped me make the distinction between "fitness" and "perfection". Oddly, all the pieces were there, but I'd never bothered to put them together in a cohesive way.

As the book repeatedly (and almost gleefully) points out, even people with a solid background in this type of reasoning fail to apply it in daily life.

The author (an eccentric polymath trader who seems like the ideal lunch date) spends rather a lot of time deconstructing the patterns humans like to create out of random events. He debunks the idea of fate and mocks the stupid little explanations people come up with to feel special, "chosen" or even skilled (e.g. US Presidents crediting themselves for upswings in the economy).

Occasionally I entertain the idea of non-random forces influencing my life because it amuses me. It's not hard to spot my own convenient delusions. Of course, accepting the fact that significant elements in life are probably random occurences is depressing and not worth thinking about unless one is trying to make a rational decision.

Having said that, I am routinely "fooled by randomness" in scenarios similar to the ones described in this book. Not my fault though, only human.

For future reference, I am copying down a few salient passages here.

On emotions:

Descartes' Error presents a very simple thesis: You perform a surgical ablation on a piece of someone's brain (say, to remove a tumor and tissue around it) wth the sole resulting effect of an inability to register emotions, nothing else (the IQ and every other faculty remain the same). What you have done is a controlled experiment to separate someone's intelligence from his emotions. Now you have a purely rational human being unencumbered with feelings and emotions. Let's watch: Damasio reported that the purely unemotional man was incapable of making the simplest decision. He could not get out of bed in the morning, and frittered away his day fruitlessly weighing decisions. Shock! This flies in the face of everything one would have expected: One cannot make a decision without emotion. Now, mathematics gives the same answer: If one were to perform an optimizing operation across a large collection of variables, even with a brain as large as ours, it would take a very long time to decide on the simplest of tasks. So we need a shortcut; emotions are there to prevent us from temporizing...

Joseph LeDoux's theory about the role of emotions in behavior is even more potent: Emotions affect one's thinking. He figured out that much of the connections from the emotional systems to the cognitive systems are stronger than connections from the cognitive systems to the emotional systems. The implication is that we feel emotions (limbic brain) then find an explanation (neocortex). As we saw in Claparede's discovery, much of the opinions and assessments that we have concerning risks may be the simple result of emotions.

On journalists and minute-by-minute reporting:

A move of 1.03 with the Dow at 11,000 constitutes less than a 0.01% move. Such a move does not warrant an explanation. There is nothing there that an honest person can try to explain; there are no reasons to adduce. But like apprentice professors of comparative literature, journalists being paid to provide explanations will gladly and readily provide them...

Significance: How did I decide that it was perfect noise? Take a simple analogy. If you engage in a mountain bicycle race with a friend across Siberia and, a month later, beat him by one single second, you clearly cannot quite boast that you are faster than him. You might have been helped by something, or it can be just plain randomness, nothing else. That second is not in itself significant enough for someone to draw conclusions...

Causality: There is another problem; even assuming statistical significance, one has to accept a cause and effect, meaning that the event in the market can be linked to the cause proffered. Post hoc ergo propter hoc (it is the consequence because it came after). Say hospital A delivered 52% boys and hospital B delivered the same year only 48%; would you try to give the explanation that you had a boy because it was delivered in hospital A?

On behaviour:

[B. F. Skinner] designed the [Skinner] box in order to study more general properties of the behavior of a collection of nonhumans, but it was in 1948 that he had the brilliant idea of ignoring the lever and focusing on the food delivery. He programmed it to deliver food at random to the famished birds.

He saw quite astonishing behavior on the part of the birds; they developed an extremely sophisticated rain-dance type of behavior in response to their ingrained statistical machinery. One bird swung its head rhythmically against a specific corner of the box, others spun their heads counterclockwise; literally all of the birds developed a specific ritual that progressively became hardwired into their mind as linked to their feeding.

(I believe this last observation is disputed in scientific circles, but it is thought-provoking when considered in the context of human behavior)

Update: There is some discussion of stoic philosophy in the last few pages (everyone should know by now that I love Marcus Aurelius). Nothing quotable, but I do like the notion of dignity in the face of randomness.