Theory of accidents

Theory of accidents says that in complex systems (among which I count our lives) we should expect that minor factors we can usually ignore will by chance sometimes cause major incidents.

Modern systems are made up of thousands of parts, including fallible human decision makers, which interrelate in ways that are impossible to track and anticipate individually. Yet one can bet on the fact that just as atoms executing a drunkard’s walk will eventually get somewhere, so too will accidents eventually occur.

Accidents can occur without clear causes, without those glaring errors and incompetent villains sought by corporate or government commissions. But although normal accident theory is a theory of why, inevitably, things sometimes go wrong, it could also be flipped around to explain why, inevitably, they sometimes go right. Economist, W. Brian Arthur, argue that a concurrence of minor factors can even lead companies with no particular edge to come to dominate their competitors. If several similar-sized firms entered a market together, small fortuitous events – unexpected orders, chance meetings with buyers, managerial whims – would help determine which ones received early sales and, over time, which came to dominate.

Full Disclaimer: I am not a financial planner. The views expressed in this post are all mine and they may or may not suit your needs. Please do you own due diligence. I do not make money on any of the products suggested in this post. 


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