{"id":4417,"date":"2019-11-26T09:39:55","date_gmt":"2019-11-26T13:39:55","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=4417"},"modified":"2022-03-11T16:09:29","modified_gmt":"2022-03-11T20:09:29","slug":"ludic-fallacy","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/ludic-fallacy\/","title":{"rendered":"Ludic Fallacy: Do You Treat Life Like a Blackjack Game?"},"content":{"rendered":"\n

What is the ludic fallacy? How does the tendency to “tunnel” into what we know lead us into making cognitive errors<\/a>?<\/p>\n\n\n\n

The ludic fallacy is the tendency to treat uncertainty in real life like uncertainty in games of chance. The problem with this approach is that, unlike games of chance, real life has no rules<\/em><\/strong>.<\/p>\n\n\n\n

We’ll cover how the ludic fallacy shapes our predictions and why thinking of uncertainty like a game of blackjack is unproductive.<\/p>\n\n\n\n\n\n\n\n

The <\/strong>Ludic Fallacy: Our Tendency to \u201cTunnel\u201d<\/strong><\/h2>\n\n\n\n

\u201cTunneling\u201d describes the natural human tendency to favor knowns <\/em>and known unknowns<\/em> rather than unknown unknowns<\/a><\/em>. In other words, our understanding of uncertainty is based almost exclusively on what has happened<\/em> in the past rather than what could have happened<\/em><\/strong>.
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The primary practitioners of tunneling are those Taleb<\/a> calls \u201cnerds\u201d\u2014academics, mathematicians, engineers, statisticians, and the like. Nerds are those who think entirely \u201cinside the box\u201d; they Platonify the world and can\u2019t perceive possibilities that lie outside their scientific models and academic training.
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Nerds suffer from the \u201cludic fallacy.\u201d (\u201cLudic\u201d comes from the Latin word ludus<\/em>, which means \u201cgame.\u201d) That is, they treat uncertainty in real life like uncertainty in games of chance, for example roulette or blackjack. The problem with this approach is that, unlike games of chance, <\/strong>real life has no rules<\/em><\/strong>.
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Nerds aren\u2019t the only ones guilty of the ludic fallacy, however; average people indulge it as well. For example, most people think casino games represent the height of risk and uncertainty. In truth, casino games hail from Mediocristan\u2014there are clear and definite rules that govern play, and the odds of winning or losing are calculable. Unlike real life, the amount of uncertainty in a casino game is highly constrained<\/strong>. This is the rub of the ludic fallacy.
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The incredible unpredictability of real life can be illustrated by a look at casinos themselves, rather than their games. Casinos spend huge sums of money on sophisticated security systems\u2014cameras, dealer training, alarms\u2014in an effort to prevent cheating. These systems are designed to foil cheats who use methods that are either known or expected. But the casino Taleb studied suffered its worst losses not from cheating but from completely unexpected real-life events (ironically, it suffered from the ludic fallacy even though it was dealing with actual games):
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