Narrative Fallacy

Nov 22 / Network Capital
We tend to see facts and interpret them as stories. We thread facts together to form a hypothetical chain of cause and effect. This hypothesis in most cases is based on our subjective experiences and reality.

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While we would all like to believe that we are objective and rational beings, in most instances we are not. We have a disproportionate tendency to see complex facts and events as oversimplified stories. A cliched examples of Narrative Fallacy in the tech- industry would be associate success with being adopted as a child. Jeff Bezos, Larry Ellison and Steve Jobs would be the perfect cases in point.

Nassim Taleb in his book The Black Swan popularizes the term ‘Narrative Fallacy’. He eloquently argues that humans seek explanations to the point of manufacturing. Scholar Michael Shermer calls this habit of seeing meaningful patterns in meaningless things as ‘Patternicity’. In its extreme form, Narrative Fallacy inspires regressive ritualistic traditions. And in its moderate form, it enables reductionist, short-sighted and obscure decision making.For Warren Buffet, the best way to resist the Narrative Fallacy is to build our ability to argue the opposing sides of any narrative that you support.
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