A few weeks ago I was part of a sort of sociology workshop about economic valuation under uncertainty. There I listened again to Dr Taleb talk about Extremistan and Mediocristan. Listening to the examples of fat-tailed quantities (money, stock prices, etc) it occurred to me that all of these were mental concepts, human constructs, not “natural” ones. So I wondered if mental concepts were fat-tailed whereas physical ones were more normal.
The speaker claimed that the same fat-tailedness held for physical phenomena, for example that was always a chance of finding a larger mountain or larger earthquake according to some scaling law.
Probably that’s true. But it’s not totally clear to me. Think of hills. There isn’t always a chance of finding a larger hill, because at some point we cease calling a large hill a hill and begin to call it a mountain.