Skin in the Game: Hidden Asymmetries in Daily Life (Incerto, #5)

by Nassim Nicholas Taleb

The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding, or better at explaining than doing.

Effectively, there is no democracy without such an unconditional symmetry in the rights to express yourself, and the gravest threat is the slippery slope in the attempts to limit speech on grounds that some of it may hurt some people’s feelings.

Universal behavior is great on paper, disastrous in practice.

Whats c onsidered to be ethical in a culture, might not lead the same result in another culture

the danger of universalism taken two or three steps too far—conflating the micro and the macro.

Start by being nice to every person you meet. But if someone tries to exercise power over you, exercise power over him.

Mmm..

Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.

WOW!

the foundation of evolution that systems get smart by elimination.

You do not want to win an argument. You want to win.

Aha!

We are much better at doing than understanding.

I personally know rich horrible forecasters and poor “good” forecasters. Because what matters in life isn’t how frequently one is “right” about outcomes, but how much one makes when one is right. Being wrong, when it is not costly, doesn’t count—in a way that’s similar to trial-and-error mechanisms of research.

what has survived has revealed its robustness to Black Swan events and removing skin in the game disrupts such selection mechanisms. Without skin in the game, we fail to get the Intelligence of Time (a manifestation of the Lindy effect,

1) time removes the fragile and keeps the robust, and 2) the life expectancy of the nonfragile lengthens with time).

The Buld & Destroy Actions

By definition, what works cannot be irrational; about every single person I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.

What is rational is what allows the collective—entities meant to live for a long time—to survive.

Those who talk should do and only those who do should talk

Ooofff!!

do your theories or mathematical representations, don’t tell people in the real world how to apply them. Let those with skin in the game select what they need.

Let us get more practical about the side effect of modernism: as things get more technological, there is a growing separation between the maker and the user.

Users are becoming more dependent on tech, while makers are becoming mor smarter

So the practice continues. Why? Because those who lecture to large audiences don’t work on lighting and light engineers don’t lecture to large audiences.

Things designed by people without skin in the game tend to grow in complication (before their final collapse).

Maybe this why systems keeps growing and falling at the end

pathemata mathemata

Great

But if you muster the strength to weight-lift a car to save a child, above your current abilities, the strength gained will stay after things calm down.

You may lose the sharpness, but nobody can take away what you’ve learned.

If you can’t effectively sue, regulate.*5

If you do not take risks for your opinion, you are nothing.

Artisans have their soul in the game. Primo, artisans do things for existential reasons first, financial and commercial ones later. Their decision making is never fully financial, but it remains financial. Secundo, they have some type of “art” in their profession; they stay away from most aspects of industrialization; they combine art and business. Tertio, they put some soul in their work: they would not sell something defective or even of compromised quality because it hurts their pride. Finally, they have sacred taboos, things they would not do even if it markedly increased profitability.

U.S., embraced the place, and took the passport as commitment: it became my identity, good or bad, tax or no tax. Many people made fun of my decision, as most of my income comes from overseas and, if I took official residence in, say, Cyprus or Malta, I would be making many more dollars. If wanted to lower taxes for myself, and

Heroes Were Not Library Rats

Fuck!

For studying courage in textbooks doesn’t make you any more courageous than eating cow meat makes you bovine.

Actually sometimes it eats your courage..

In that sense, decentralization and fragmentation, aside from stabilizing the system, improves people’s connection to their labor.

Simply: if you can’t put your soul into something, give it up and leave that stuff to someone else.

The Lindy effect separates things that gain from time from those that are destroyed by it.

Chapter 13 explains why virtue requires risk taking, not the reputational risk reduction of playing white knight on the Internet or writing a check to some nongovernmental organization (NGO) who might help destroy the world.

“there is more luck than you think,”

The ethical is always more robust than the legal. Over time, it is the legal that should converge to the ethical, never the reverse.

It may not be ethically required, but the most effective, shame-free policy is maximal transparency, even transparency of intentions.

As to Jewish ethics: it distinguishes between thick blood and thin blood: we are all brothers, but some are more brothers than others.

So we exercise our ethical rules, but there is a limit—from scaling—beyond which the rules cease to apply. It is unfortunate, but the general kills the particular.

whether it is possible to be both ethical and universalist.

For whenever the “we” becomes too large a club, things degrade, and each one starts fighting for his own interest. The ab...

The physicist and complexity researcher Yaneer Bar-Yam showed quite convincingly that “better fences make better neighbors”—something

people get along better as neighbors than roommates.

But it is a critical mistake to think that people can function only under a private property system.

And the same mechanism for risk sharing took place with caravans along desert routes. If merchandise was stolen or lost, all merchants had to split the costs, not just its owner.

Don’t tell me what you think, tell me what you have in your portfolio.

The legal system and regulatory measures are likely to put the skin of the doctor in the wrong game.

Doctors Skin

A doctor is pushed by the system to transfer risk from himself to you, and from the present into the future, or from the immediate future into a more distant future.

Doctors Are playing the wrong game

But the doctor is pressured to treat you to protect himself. Should you drop dead a few weeks after the visit, a low probability event, the doctor can be sued for negligence, for not having prescribed the right medicine that is temporarily believed to be useful (as in the case of statins),

Doctors chose short-term solutions, because the system made it this way

the long-term medical risks are hidden; they will play out in the long run, whereas the legal risk is immediate.

Shortterm over longterm games

Studying individual ants will almost never give us a clear indication of how the ant colony operates.

Individuals. Society As individual organ

The rule we discuss in this chapter is the minority rule, the mother of all asymmetries. It suffices for an intransigent minority—a certain type of intransigent minority—with significant skin in the game (or, better, soul in the game) to reach a minutely small level, say 3 or 4 percent of the total population, for the entire population to have to submit to their preferences.

Minority "skin in the game" power