Antifragility was first coined as a term by author, and options trader Nassim Nicholas Taleb. Antifragility is a characteristic of systems that thrive as a result of stressors, volatility, and randomness. Therefore, Antifragile is the opposite of fragile. Where a fragile thing breaks up to volatility; a robust thing resists volatility. An antifragile thing gets stronger from volatility (provided the level of stressors and randomness doesn’t pass a certain threshold).
In his book Antifragile: Things That Gain from Disorder, Taleb described antifragility as follows:
Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it anti-fragile. Anti-fragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the anti-fragile gets better.
Taleb suggests human society be made antifragile so it can benefit from black swan events.
These events, which are unpredictable and can have severe consequences, are traditionally managed by suppressing randomness, chaos, and volatility.
While black swan events are impossible to predict, Taleb argues that a better strategy is to accept their inevitability and take advantage of the disorder that ensues.
Indeed, Taleb’s antifragility strategy thrives during black swan events because it assumes there is more to gain than there is to lose.
Conversely, the fragility strategy where randomness is suppressed perishes during a black swan event because it assumes there is more to lose than there is to gain.
The concept of antifragility can be applied to almost any industry, including transportation planning, physical fitness, aerospace engineering, project management, risk analysis, and computer science.
For the individual, antifragility helps them navigate a world full of random and unpredictable stressors intent on altering their life trajectory.
One of the best examples of fragility in action can be seen in fire management, where the systematic prevention of forest fires under the guise of safety makes an evitable fire outbreak much more catastrophic.
Another example is the immune system of the human body, which needs regular contact with pathogens to be capable of defending the body during a serious infection.
If the immune system does not interact with pathogens early in life, it can become hypersensitive, react with sometimes harmless substances, and cause chronic allergies.
The Black Swan Effect
In a commencement speech at the American University of Beirut, Black Swan’s author, Nicholas Nassim Taleb, used a precise definition of success. Rather than a set of rules to follow, Taleb uses a simple heuristic:
You look in the mirror every evening, and wonder if you disappoint the person you were at 18, right before the age when people start getting corrupted by life. Let him or her be the only judge; not your reputation, not your wealth, not your standing in the community, not the decorations on your lapel. If you do not feel ashamed, you are successful. All other definitions of success are modern constructions; fragile modern constructions.
Taleb’s definition of success is based on the idea of “antifragility,” a term he coined.
The novelty of Taleb’s way of thinking is based on what I like to define as “the black swan mindset.”
What does that mean?
According to Taleb, the world can get divided into three categories. It is fragile, robust, and antifragile.
These three groups exist in any domain.
What is the difference between the three? Let me introduce you to three characters: Mr. Fragilista, Mr. Robusto, and Mr. Stoico.
The Three Characters
Mr. Fragilista is a thriving academic.
He devoted his life to formulating economic theories. Yet he never tested them in the real world.
He spends his days lost in thought. Anything he sees is an opportunity to draw conclusions and create new world models.
He is a strong supporter of the efficient market hypothesis, and anywhere he goes, he brings a bunch of newspapers that give him the impression of having a deep understanding of the economy, political system, and society.
Mr. Fragilista is highly rational, and he blindly believes in science.
He thinks that the world works linearly, and he developed a consistent model to find patterns anywhere.
In fact, he dispels advice to anyone. From investors to politicians, he has a say about anything.
He doesn’t care about money but only about recognition.
The worst thing that could ever happen to him in life is hearing anyone saying to him, “you are wrong.”
When this happens, Mr. Fragilista gets somewhat aggressive in public but extremely depressed in private.
Mr. Robusto is a stock investor
He is incredibly smart. Even though he only has a diploma, he learned to value stocks early.
He is now a millionaire. His capital is all invested, as he believes that the key to eliminating risk is diversification.
From a low-income family, Mr. Robusto became obsessed with wealth at a very young age.
He enjoys sophisticated food, such as caviar, accompanied by Champaign, even though he only learned to like them recently, and now he cannot live without them.
To be part of the establishment, Mr. Robusto built relationships with aristocrats.
To feel accepted, he became part of an exclusive club that, although it costs him several thousand per month, makes him feel important. Mr. Robusto has gone through many crises in his life, and this created unshakable optimism.
There will be no event able to break him. He believes that financial markets are not efficient, yet he feels safe investing in stocks. In fact, he likes to invest in large companies, which according to Mr. Robusto, are “too big to fail.”
Mr. Stoico is a former options trader
Since childhood, he didn’t show particular intelligence.
On the other hand, he strived to understand the real world as much as possible. He didn’t like theoretical finance or sophisticated financial models.
Yet his thirst for understanding real-world problems made him become an expert in probability theory and applied mathematics. Mr. Stoico never liked sophisticated food or people. He gets along with ordinary people.
He often makes friends with the cab drivers and the doormen. Mr. Stoico believes that the world is too complicated to fit in a model.
Also, he thinks that reality often tricks us. For such reason, he studies the most advanced psychological advancement related to human biases.
He knows for a fact that people often see causality where there is only randomness.
Based on that, he doesn’t like stocks.
Therefore, he invested 90% of his money in Treasury Bonds while he used the remaining to speculate on rare events through options.
The Montecarlo Simulator Test
We don’t live in a deterministic world. In short, the past becomes predictable only after it unravels.
And the ones that are tricked into believing that things were supposed to happen that way did fall into an insidious trap called “hindsight bias.”
How can we avoid this trap?
We have to live our reality like we would in a Montecarlo Simulator.
What is that? It is a tool that allows us to see all the possible outcomes once a set of variables is considered.
Take, for instance, this example: we have two individuals, both flipping a coin but with a different degree of probability of succeeding.
In fact, person A has a 51% chance of winning, while person B has a %49 chance. What does it mean? It means that at each turn, if we flip a coin, Person A will win 51 times out of 100, while Person B will win 49 times out of 100.
This is not a sure thing in the short term. For instance, we make them bet 100 times.
It may happen that person B will do slightly better compared to person A. Why does it happen? This is due to the law of small numbers. In short, probability tells us how the world works in the long run.
In this scenario, we may be tricked into thinking that person B has a better strategy compared to person A. Yet, person B is doing well out of pure luck!
If we change the scenario and make them bet 10,000, the incredible will happen. In this case, person B would be inevitably broke, while person A would be doing exceptionally well.
Why? This is due to the law of large numbers.
In short, in the real world, we tend to judge people based on their success. Their success may be due to pure luck.
Therefore, we fall into the so-called “survivorship bias.” To avoid that, we must think like a Montecarlo Simulator and ask, “In other parallel worlds, how many chances of success would that person have?”
If, in most of the worlds, that person is not successful as he is in the “real world,” we must deem that person extremely lucky.
If we run this simulation in our heads throughout the day, we will discover a new incredible reality.
Things don’t seem as confident and concatenated as they appeared before.
Who Will Survive?
Going back to our three characters. Who do you think will survive in a Montecarlo Simulation?
Well, the chances are that Mr. Stoico will be the one who thrives. Why? He is antifragile.
In short, if we take Mr, Stoico and place him under the Montecarlo test, he will come out intact if not satisfied in most of the cases.
While the other two characters will easily blow up in the long run.
Now you can understand the antifragility triad.
The antifragility triad
To explain the difference between fragility, robustness, and antifragility, Taleb used the example of three ancient myths:
- Fragility – Damocles is fragile because his life depends on a thin hair that holds a sword above his head. The slightest weakness in the hair means the sword will kill him.
- Robustness – Phoenix is robust because whenever he dies, he arises from the ashes and returns to the same state. Stressors do not harm him, but he does not benefit or grow from them either.
- Hydra – whenever one of Hydra’s many heads is cut off, two new heads grow back in its place. Hydra is more than robust because she grows stronger as a result of stressors. She is antifragile.
Principles for leading an antifragile life
As you might have guessed, an antifragile way of life involves finding ways to benefit from the chaos and disorder we will inevitably experience.
Generally speaking, individuals who embrace antifragile principles are playing the long game.
They do not optimize for today or tomorrow, sacrificing short-term efficiency for long-term antifragility.
To achieve this, they engage in second-order thinking where the consequences of their decisions are analyzed for their future impact.
Here are ten simple principles for leading an antifragile life:
- Adhere to simple rules and procedures.
- Ensure contingency plans are in place so that no single failure can ever be catastrophic.
- Resist the urge to suppress randomness.
- Keep your options open.
- Look for traditional habits and rules that have been effective for a long time.
- Focus on avoiding what doesn’t work rather than trying to discover what does work.
- Take lots of small risks through experimentation.
- Avoid becoming consumed or preoccupied with data.
- Ensure you have your soul in the game.
- Avoid taking risks with potentially significant negative repercussions.
- Antifragility is a characteristic of systems that thrive as a result of stressors, volatility, mistakes, attacks, or failures. The concept was explained in detail by author Nassim Nicholas Taleb in his book Antifragile: Things That Gain from Disorder.
- Antifragility argues that since random and chaotic events are inevitable, society may as well position itself to profit from them. This notion contrasts with traditional approaches that favor risk management and the mitigation of negative impacts.
- Leading an antifragile life means sacrificing some degree of short-term efficiency for long-term antifragility. Considering the second-order consequences of decisions is one way to embody this mindset. Other helpful principles include taking small risks through experimentation, resisting the urge to suppress randomness, and ensuring contingency plans are in place to avoid catastrophic failure.
Connected Thinking Frameworks
Convergent vs. Divergent Thinking
Law of Unintended Consequences
Read Next: Biases, Bounded Rationality, Mandela Effect, Dunning-Kruger Effect, Lindy Effect, Crowding Out Effect, Bandwagon Effect.