Ludic Fallacy

The ludic fallacy is a term coined by Nassim Nicholas Taleb in his 2007 book The Black Swan. "Ludic" is from the Latin ludus, meaning "play, game, sport, pastime." It is summarized as "the misuse of games to model real-life situations." Taleb explains the fallacy as "basing studies of chance on the narrow world of games and dice."

It is a central argument in the book and a rebuttal of the predictive mathematical models used to predict the future – as well as an attack on the idea of applying naïve and simplified statistical models in complex domains. According to Taleb, statistics works only in some domains like casinos in which the odds are visible and defined. Taleb's argument centers on the idea that predictive models are based on platonified forms, gravitating towards mathematical purity and failing to take some key ideas into account:

• It is impossible to be in possession of all the information.
• Very small unknown variations in the data could have a huge impact. Taleb does differentiate his idea from that of mathematical notions in chaos theory, e.g. the butterfly effect.
• Theories/Models based on empirical data are flawed, as events that have not taken place before for which no conclusive explanation or account can be provided.