Another month has passed and here is a new rationality quotes thread. The usual rules are:
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What's the difference between "based on computation of the odds" and "based on some model"?
Taleb is doing some handwaving here.
"Some model" in this context is just the assumption of a specific probability distribution. So if, for example, you believe that the observation values are normally distributed with the mean of 0 and the standard deviation of 1, the chance of seeing a value greater than 3 (a "three-sigma value") is 0.13%. The chance of seeing a value greater than 6 (a "six-sigma value") is 9.87e-... (read more)