One In A Million?

John Hagel posts about living in the world of Pareto rather than Gauss. If you have encoutered The Long Tail then you know all about Pareto distributions - hell if you've been to see a blockbuster movie or started a blog then you know all about Pareto distributions.

Now this links to at least two previous posts on this blog. Do the results of Andrew McAfee's research into the impact of IT spending imply that certain forms of IT can turn industries Paretian rather than Gaussian?



The other topic concerns events. Hagel & the authors he cites suggest that apparently "one in a million" events are more common in a Paretian world than a Gaussian one. Benoit Mandelbrot - the dude who should have invented the etchasketch - has done fascinating research on the Paretian nature of financial markets. We may miscalculate the chances of rare events if we do not understand the nature of the system properly. This also implies that as the agents in a system become more interlinked the predictability & probability of behaviours & outcomes will change.