## Elie Ayache: The End of Probability – Not only does the market not need probability, the market replaces probability

**“Valuation theory shackles us to the tree of possibilities, with the necessity that the states of the world of the next day be commensurate with those of the previous day.” **

**Excerpts via (Elie Ayache)**

My objection to the objection: Is it really probability that is applied to those “foreign” events? Surely probability can be applied to dice, to roulette wheels, to the motion of the pollen particle, to population statistics, etc., because this is circular. Indeed, these are precisely the statistical phenomena from which probability emerged as a concept to begin with. However, the real challenge for probability is to apply to real events (happening outside the casino, or the tables of actuarial science), to singular events that are in no ways statistical. And what are “real events”? Precisely events that disturb the range of possibilities on which probability was supposed to be defined – what Taleb calls “Black Swans.”

The whole charge that Taleb is mounting against probability and its theorists is precisely concerned with such events. Badiou is the main philosopher of the event who formalized, more than 20 years ago, all that Taleb is trying to say about Black Swans. At no point does Badiou mention probability. Deleuze is the other, perhaps less formalistic, philosopher of the event. He speaks of the Nietzschean dice-throw (which I am sure Deleuze would agree is the market of contingent claims, if only he had known it like I do) and of the “empty square” that keeps redistributing the probability distributions (and which I am sure Deleuze would agree corresponds to what I call “recalibration”)