Fat Tails
A fat-tailed distribution is a probability distribution that has the property, along with the heavy-tailed distributions, that they exhibit extremely large skewness or kurtosis. This comparison is often made relative to the ubiquitous normal distribution, which itself is an example of an exceptionally thin tail distribution, or to the exponential distribution. Fat tail distributions have been empirically encountered in a fair number of areas: economics, physics, and earth sciences. Fat tail distributions have power law decay in the tail of the distribution, but do not necessarily follow a power law everywhere.
Read more about Fat Tails: Definition, Fat Tails and Risk Estimate Distortions, Applications in Economics, Applications in Geopolitics
Famous quotes containing the words fat and/or tails:
“The opera isn’t over till the fat lady sings.”
—Anonymous.
A modern proverb along the lines of “don’t count your chickens before they’re hatched.” This form of words has no precise origin, though both Bartlett’s Familiar Quotations (16th ed., 1992)
“Panache upon panache, his tails deploy
Upward and outward, in green-vented forms,
His tip a drop of water full of storms.”
—Wallace Stevens (1879–1955)