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

by Nassim Nicholas Taleb

Don’t tell me what you “think,” just tell me what’s in your portfolio.

And the contact with the real world is done via skin in the game—having an exposure to the real world, and paying a price for its consequences, good or bad.

The knowledge we get by tinkering, via trial and error, experience, and the workings of time, in other words, contact with the earth, is vastly superior to that obtained through reasoning, something self-serving institutions have been very busy hiding from us.

they compare the actions of the “dictator” to those of the prime minister of Norway or Sweden, not to those of the local alternative.

Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

government interference in general tends to remove skin in the game. The good news is that in spite of the

risk transfer blows up systems.

“I go to other people’s funerals so they come to mine.”

you can practice your freedom of religion so long as you allow me to practice mine; you have the right to contradict me so long as I have the right to contradict you.

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.

Regulations, while appearing to be a remedy on paper, if anything, exacerbate the problem as they facilitate risk-hiding.

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

what has survived has revealed its robustness to Black Swan events and removing skin in the game disrupts such selection mechanisms.

if something stupid works (and makes money), it cannot be stupid

For most people you run into in real life—bakers,

pay a price for their mistakes.

Non-skin-in-the-game people don’t get simplicity.

The mere presence of an assistant suspends your natural filtering—and

By some mysterious mental mechanism, people fail to realize that the principal thing you can learn from a professor is how to be a professor—and

it is not irrational, according to economic theory, to leave money on the table because of your personal preference;

historians who tend to report on wars rather than peace,

the principle that you need to eat what you feed others.

So, “giving advice” as a sales pitch is fundamentally unethical—selling cannot be deemed advice. We can safely settle on that. You can give advice, or you can sell (by advertising the quality of the product), and the two need to be kept separate.

There were people with whom we had a relational rapport, others with whom we had a transactional one. The two were separated by an ethical wall, much like the case with domestic animals that cannot be harmed, while rules on cruelty are lifted when it comes to cockroaches.

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

Putting Shiites, Christians, and Sunnis in one pot and asking them to sing “Kumbaya” around the campfire while holding hands in the name of unity and fraternity of mankind has failed.

It also explains how tribes operate: you are part of a specific group that is larger than the narrow you, but narrower than humanity in general. Critically, people share some things but not others within a specified group.

I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist.

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.

(There is a strong nonlinearity: a person classified as prediabetic or prehypertensive is, in probability space, 90 percent closer to a normal person than to one with the condition.)

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

for the patient to avoid treatment when he or she is mildly ill, but use medicine for the “tail events,” that

is, for rarely encountered severe conditions.

both the doctor and the patient have skin in the game, though not perfectly, but administrators don’t—and

Administrators everywhere on the planet, in all businesses and pursuits, and at all times in history, have been the plague.

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 an intransigent group, and the majority a flexible one. And their relationship rests on an asymmetry in choices.

Rory wrote to me about the beer-wine asymmetry and the choices made for parties: “Once you have 10 percent or more women at a party, you cannot serve only beer. But most men will drink wine. So you only need one set of glasses if you serve only wine—the universal

donor, to use the language of blood groups.”

Genes follow majority rule; languages minority rule. Languages travel; genes less so.

Purely monotheistic religions such as Protestant Christianity, Salafi Islam, or fundamentalist atheism accommodate literalist and mediocre minds that cannot handle ambiguity.*4

No, it is the most intolerant person who imposes virtue on others precisely because of that intolerance.

and how we can show that morality is more likely to be something enforced by a minority.

“Why didn’t the Poles in Warsaw help their Jewish neighbors more?,” responded that they generally did. But it took seven or eight Poles to help one Jew. It took only one Pole, acting as an informer, to turn in a dozen Jews.

Outcomes are paradoxically more stable under the minority rule—the variance of the results is lower and the rule is more likely to emerge independently across separate populations.

“Would you agree to deny the freedom of speech to every political party that has in its charter the banning of freedom of speech?” Let’s go one step further: “Should a society that has elected to be tolerant be intolerant about intolerance?”

Yes, an intolerant minority can control and destroy democracy.

we need to be more than intolerant

Simply, they violate the Silver Rule.