coined by Nassim Nicholas Taleb

is the human tendency to create simple, causal stories to explain complex events, even when there is little evidence, leading to poor decision-making.

This fallacy makes us oversimplify reality.

Our brains like to “make sense” of the random chaos around us, so the stories provide a sense of calm.

Therefore, the original stories are often the ones that gets preserved and deeply entrenched. New information is massaged to fit that story, or rejected if it doesn’t.

This can lead to:

• Overconfidence in our understanding of complex systems (e.g., markets, history, personal lives)
• Hindsight bias: believing outcomes were more predictable than they actually were
• Resistance to new evidence that contradicts our established narratives

Examples

• Stock Market: After a market crash, analysts create stories about why it happened, even if the real causes are complex or unknowable.
• Personal Life: We explain our successes or failures with simple stories (“I got lucky,” “I worked hard”), ignoring randomness and external factors.
• History: Historical events are often explained as inevitable or the result of a few key decisions, overlooking the role of chance and complexity.

Remember that not everything happens for a clear reason—sometimes, things just happen.