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The Four Quadrants

Nassin Nicholas Taleb, 2007, The Black Swan, Penguin Books: 365

... Simple Payoffs Complex Payoffs
Mediocristan First Quadrant
Extremely Safe
Second Quadrant
(Sort of) Safe
Extremistan Third Quadrant
Safe
Fourth Quadrant
Black Swan Domain

First Quadrant

Simple binary payoffs, in Mediocristan: forecasting is safe, life is easy, models work, everyone should be happy. These situations are, unfortunately, more common in laboratories and games than in real life.

Second Quadrant

Complex payoffs in Mediocristan: statistical methods may work satisfactorily, though there are some risks.

Third Quadrant

Simple payoffs in Extremistan: there is little harm in being wrong, because the possibility of extreme events does not impact the payoffs. Don't worry too much about Black Swans.

Fourth Quadrant

Complex payoffs in Extremistan: thas is where the problem resides; opportunities are present too. We need to avoid prediction of remote payoffs, though not necessarily ordinary ones. Payoffs from remote parts of the distribution are more difficult to predict than those from closer parts.