Skin In The Game: Hidden Asymmetries in Daily Life

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skin_in_the_game.jpg

Skin In The Game: Hidden Asymmetries in Daily Life

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Taleb, the author of both The Black Swan and Antifragile, discusses the concept of “skin in the game”. In essence, by abstracting away concepts and situations, people who have no skin in the game will not personally suffer any consequences if something goes awry. This results in them making sub-par decisions since they share none of the risk. For example, when a salesman does not have to use his own product, he has no skin in the game and can shill sub par products. Or when the Pope talks about the healing power of prayer but goes to the hospital for his illnesses, he is not putting skin in the game with his religious beliefs. Similarly, atheists will often adopt religious-like ceremonies like daily yoga, not fully committing to their worldviews. Taleb discusses the theory and provides both ancient & modern examples of skin in the game.

“You cannot separate knowledge from contact with the ground. Actually, you cannot separate anything from contact with the ground. 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.”

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