Fooled by Randomness

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets is a book by Nassim Nicholas Taleb about the fallibility of human knowledge. It was first published in 2001, and updated editions followed a few years later. It is the first part of Taleb's multi-volume philosophical essay on uncertainty, the Incerto, which continues with The Black Swan (2007–2010), The Bed of Procrustes (2010–2016), Antifragile (2012) and Skin in the Game (2018).

Its central claim is that modern humans are often unaware of randomness and tend to explain random outcomes as if they were not random. Taleb argues that we overestimate causality and see the world as more explicable than it is, looking for explanations even where there are none. The book examines distortions such as survivorship bias, which leads us to study the winners while forgetting the huge number of losers, and skewed distributions, in which a bet that almost always wins but loses everything on rare occasions can easily fool anyone who looks only at the track record. As Taleb puts it, option sellers eat like chickens and go to the bathroom like elephants: they earn a steady small income, but a disaster can cost them a fortune.

Fortune selected the book as one of the 75 "Smartest Books of All Time." USA Today noted that many of its criticisms of the financial industry proved justified. Forbes described it as playful, self-effacing and at times insufferably arrogant, but always thought-provoking. It has been translated into about twenty languages and is reported to have sold over half a million copies.