Tuesday, June 11, 2024

Review of Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb

This book review was written by Eugene Kernes   

Book can be found in: 
Book Club Event = Book List (12/28/2024)

Watch Short Review


“Do not mistake skin in the game as defined here and used in this book for just an incentive problem, just having a share of the benefits (as it is commonly understood in finance).  No.  It is about symmetry, more like having a share of the harm, paying a penalty if something goes wrong.” – Nassim Nicholas Taleb, Book 1: Introduction, Page 4

Beware of the person who gives advice, telling you that a certain action on your part is “good for you” while it is also good for him, while the harm to you doesn’t directly affect him.” – Nassim Nicholas Taleb, Book 2: Chapter 1: Why Each One Should Eat His Own Turtles, Page 51

“Someone without skin in the game – say, a corporate executive with upside and no financial downside (the type to speak clearly in meetings) – is paid according to some metrics that do not necessarily reflect the health of his company; these he can manipulate, hide risks, get the bonus, then retire (or go do the same thing at another company) and blame his successor for subsequent results.” – Nassim Nicholas Taleb, Book 5: Chapter 7: Inequality and Skin in the Game, Page 130


Is This An Overview?

Skin in the game is outcome symmetry of decisions.  A symmetry of the benefits and harm derived from a decision.  Skin in the game within a transaction means having no asymmetric uncertainty.  Skin in the game is about taking risk, rather than transferring the risk.  Advice that benefits the individual and the adviser, without the adviser sharing the harm, is bad advice.  Those who make decisions without suffering negative repercussions of being wrong, continue making bad decisions.  Alternatively, being accountable for errors of decisions, makes people learn from their mistakes and improve their decision making.



Although the ambiguity of language is understood, the use of language in the book creates more negative consequences than benefits.  Harsh language is being used throughout the book, which is partly meant to give people skin in the game who have not taken responsibility for wrong decisions, and also to signal freedom.  The consequences of the harsh language can be 1) to make society more intolerant given the influence of the author, 2) possibly enable a fundamental attribution bias for dynamic decisions are rarely made by a single person but who then becomes a scapegoat for others, and 3) make people defensive which prevents learning. 


The focus of skin in the game is about those who are making wrong decisions without facing the negative consequences, but as the author recognizes, there have been those who perished even though they were right.  Its uncertain if the author has skin in the game with the advice given about using skin in the game to improve situations.  

Questions to Consider while Reading the Book

•What is the raison d’etre of the book?  For what purpose did the author write the book?  Why do people read this book?
•What are some limitations of the book?
•To whom would you suggest this book?
•What is skin in the game? 
•What does is mean to have contact with the ground?
•How did skin in the game effect learning?
•What is leaning through via negativa?
•What is the effect of interventionists? 
•What is a Black Swan?
•How did skin in the game effect lords and monarchs? 
•How did skin in the game effect bureaucracy?
•What is the Rob Rubin trade? 
•How to hide risk?
•What are Hammurabi’s laws?
•What is the effect of universal behavior? 
•What are fools of randomness?
•What are crooks of randomness?
•What are revealed preferences? 
•How did skin in the game effect science?
•How did skin in the game effect Metro North train design?
•How did skin in the game effect the complexity of a system? 
•What are the differences between regulations and legal systems? 
•How did skin in the game effect artisans? 
•How did skin in the game effect entrepreneurs? 
•What kind of advice should be taken and avoided? 
•Why treat the in-group different than the out-group?
•Is ethics or laws more robust?
•How does scaling effect ethics?
•How should uncertainty asymmetry effect what to trade? 
•How did skin in the game effect journalists? 
•What are emergent properties? 
•What is the minority rule? 
•How did skin in the game effect an honest person and a criminal? 
•Which religion should the Khazars have?
•How does f*** you money effect behavior?
•What do organizations want from members? 
•Would you rather be a dog or a wolf?
•What are the consequences for a whistleblower? 
•How to make sure that saints and moral heroes remain ethical? 
•How to prevent suicide-terrorists? 
•What is rent-seeking?
•How did skin in the game effect on a corporate executive? 
•What is the Lindy effect?
•How does bureaucrats effect activities? 
•What cups are poison drunk in? 
•How did Assassins effect behavior?
•What is the difference between monitoring in small communities and in the internet age? 
•How to practice righteousness?
•What kind of events are journalists interested in?
•How did skin in the game effect religion? 
•Does the Pope believe in the power of prayer? 

Book Details
Edition:                   Random House Trade Paperback Edition
Publisher:               Random House [Penguin Random House]
Edition ISBN:         9780525511076
Pages to read:          251
Publication:             2020
1st Edition:              2018
Format:                    Paperback

Ratings out of 5:
Readability    5
Content          4
Overall          3