Tail Distributions
Set of probability distributions that display particular characteristics, owing to their statistical makeup, such as a or 'fat-tailed' distribution, meaning they decay like a power law, or a 'normal' tail which follows the normal distribution.
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Origin
The study of fat tails traces to Vilfredo Pareto, whose 1897 Cours d'économie politique documented the power-law distribution of wealth. Benoît Mandelbrot applied the concept to finance in a landmark 1963 Journal of Business paper, showing cotton-price movements deviated sharply from the normal distribution — meaning extreme events were far more frequent than models assumed. Nassim Nicholas Taleb brought the risk implications to mass audiences in The Black Swan (2007).
Updated February 22, 2026