Many war hawks don't themselves bear any risks of dying in a war they advocate. Taleb calls this sort of a trade, with upside gain but no or limited downside risk, a "Bob Rubin trade". Robert Rubin, a highly-paid director and senior advisor at Citigroup, paid no financial penalty when Citigroup had to be rescued by U.S. Those who err and have SITG will not survive, hence evolutionary processes will eliminate (physically or figuratively by going bankrupt etc) those tending to do stupid things. Bearing no downside for one's actions means that one has no "Skin In The Game", which is the source of many evils.Īn evolutionary process is an additional argument for SITG. A fund manager that gets a percentage on wins, but no penalty for losing is incentivized to gamble with his clients funds. Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations." The centrality of negative incentives Īctors - per Taleb - must bear a cost when they fail the public. You cannot make profits and transfer the risks to others, as bankers and large corporations do. Taleb argues that "For social justice, focus on symmetry and risk sharing. In contrast, to Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, the other is stuck with the risks. If an actor pockets some rewards from a policy they enact or support without accepting any of the risks, economists consider it to be a problem of "missing incentives". The book is dedicated to "two men of courage": Ron Paul, "a Roman among Greeks" and Ralph Nader, "Greco-Phoenician saint". The book is part of Taleb's multi-volume philosophical essay on uncertainty, titled the Incerto, which also includes Fooled by Randomness (2001), The Black Swan (2007–2010), The Bed of Procrustes (2010–2016), and Antifragile (2012). Taleb's thesis is that skin in the game-i.e., having a shared risk when taking a major decision-is necessary for fairness, commercial efficiency, and risk management, as well as being necessary to understand the world. Skin in the Game: Hidden Asymmetries in Daily Life (acronymed: SITG) is a 2018 nonfiction book by Nassim Nicholas Taleb, a former options trader with a background in the mathematics of probability and statistics.
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