Skin in the Game: Hidden Asymmetries in Daily Life

Taleb has delivered another intriguing book that centers on dealing with uncertainty in life. With his now-familiar straight forward and engaging writing style, he exposes the reader to numerous and varied people and ideas that have shaped history. His main thesis is the importance of not leaving decisions up to bureaucrats, who have no "skin in the game". He cites several examples, especially related to the field of finance, where certain individuals are exposed to the upsides of decisions but then pass the downside effects off to others, thereby coming away unscathed and ready to repeat the process over again. Another underlying theme throughout is his belief that most intellectuals do not properly understand the field of probabilities and constantly misapply it and when the inevitable disastrous effects occur, they blame it on something other than their own ignorance.

The book is written in short chapters with his important conclusions separated and printed in italics. This makes for easy reference and makes his key ideas more digestible. Some of the biggest values in the book are his originality and independence of thought- he very proudly asserts his ideas and backs them up with the thinking that he had to have done on his own in order to defend them. He is also reality centered- which is very rare with today's intellectuals. He demonstrates this by showing that if something continually works, it can't be stupid. He shows experience gained by doing is far more valuable than by conclusions drawn only from reasoning. This is in sharp contrast to most other writers of today who when confronted with a conflict between their ideas/ worldview and reality, are quick to dispense with reality. Taleb shows that one of the prime benefits of having skin in the game is it keeps people tied to reality.

Another key idea he shares is related to the Lindy effect and the importance of recognizing the asymmetry of outcomes. The lindy effect states that something that has been around for a while is more likely to stay around (experience over rationalism) and how overlooking asymmetrical outcomes will inevitably end in ruin by underestimating the severity of tail risk.

My two biggest gripes are his attitude that employees are slaves and that virtue consists of sacrificing for the collective. He seems genuinely concerned with the average worker and is definitely not shy about attacking the "experts", but also calls pretty much anyone other than an entrepreneur a slave. Perhaps it is because I fall squarely into this category, but the idea that people who work for others are slaves undermines the entire system of capitalism- capitalism is the only system that prevents slavery, in principle. And while I agree wholeheartedly with his attack on big government, it does not make sense to me how much emphasis he places on individuals and entrepreneurs but then also states the importance of sacrificing to the collective.

Highly recommend, along with his previous books. Very thought provoking from an all too rare independent thinker.

Unsullied Pensées for our times, presented in delightfully flâneuric style. Probably your best non-fiction reading bet for the season. Read it carefully, to the end, and in the end your life will likely be changed for the better through an increased awareness of the "Hidden Asymmetries in Daily Life" and the desirability of listening to and supporting folks having "Skin in the Game". And while you are at it, have a go at The Black Swan (if you haven't already done so), and the other volumes in the Incerto collection, especially Fooled by Randomness. They're fun. And they're important. You can disagree with Taleb, and even dislike him, but you shouldn't ignore him, and what he has to say. If you are offended by him, have a deep look into the nearest mirror before you speak.

Taleb has interesting ideas in general, but this book is contrived, disjointed and feels like a stretch. He still hasn't given up his immature obsession with insulting anyone who he doesn't feel his intellectual peer, kind of like an overgrown but slightly more polite version of a YouTube comment troll. I'd hoped he'd grow out of it, but he hasn't. The biggest irony, in a book called Skin in the Game, is how he literally spends half a page insulting book reviewers because they have no "skin in the game" but then fills the back cover of the book with reviews FROM STRANGERS ON TWITTER identified by only their first name! One line book reviews by anonymous people on the internet is literally the best definition of no "skin in the game" I can think of. Just think of the insults Taleb would have leveled against someone else doing the same thing and consider his ideas in this book accordingly.

Finally, Taleb dug it deep into language, culture and religion, the arena of which the modern leftards, maniac of political correctness and nihilists try hard to downplay its central role to any modern society. His work contributes to re-establish our faith in nation state and how good fences make us good neighbours to each other. One thing Taleb did not really achieve is his treatment of ergodicity and its link to survival. His main theme is often sidetracked with his bashing the Wahhabi Saudis, Monsanto-Hillary, Bob Rubin Trade, Bullshit Mediocristan Economist and Psychologist etc. In my opinion, his work is incomplete, though his objective seems aggressive and enormous this time, any more than Antifragile and Black Swan combined.

I am a big Taleb fan. Antifragile is amazing. However, I'm sad to say I find Skin in the Game to be nowhere near the caliber of his other books. To me, it's scattered, disjointed and disorganized. He often makes assertions that would seem to lead to an interesting discussion, but then just moves on. Overall it feels very undisciplined to me. And it's not that I necessarily disagree with anything he's saying - I just find that this book makes those points in an uneven way.

Another interesting book in the series. This one is less polished and more train of thought. The reader is left to connect the dots, and distill the meaning. I would recommend that you read all of his books especially Antifragile before tackling this one. The summary statement at the end is worth reading every morning when you wake up.

The first Taleb book that I could barely finish. This is largely a lashing out at everyone who has directly or indirectly opposed Taleb’s views. This is of course a style made wildly popular by our Twitter driven social system.

I love reading Taleb's books. Fascinated by the path to an unfathomable way of looking at randomness, asymmetries and risk-taking. I reread some of the lines in this book and it always takes me into a deep sense of understanding and relating to my daily lives. ​

Taleb is engaging and perceptive. I don't always agree (or in some cases completely follow) his reasoning, but he does lead one to think. However, it is important to distinguish between his insights and his brutal sarcasm. That is something often difficult to do.
PS- The guy is either gangbusters with Google or is wildly well-read. I'm betting on the latter.

This was my first book from Mr. Taleb. There are some great ideas. The topics of the intolerant minority, the general premise of skin in the game, and how scale matters are excellent but... the writing style is so condescending that it detracts from the ideas. It seems that anyone who doesn't think like Mr. Taleb is an idiot. I'm glad I read the book, but it left a bombastic taste in my mouth.

Maybe this was humor/sarcasm? No, I don't think so. Here are a few examples :

pg.159 "In some fake fields like economics..." pg., 31 "...I am now fighting the conventional educational system, made by dweebs for dweebs." pg. 29 "On the other hand, in places with low rent-seeking (say the United States before the Obama administration." etc...

His thoughts on education are stated well on pg. 146 " Academia has a tendency, when unchecked (from lack of skin in the game), to evolve into a ritualistic self-referential publishing game" - OK, I understand the opinion, and wish more of the ideas were presented without the name calling or unsubstantiated generalizations.

[TLDR] This practical and provocative book is mostly about:
1) Uncertainty and the reliability of knowledge (b/s detection, theory vs practice, cosmetic vs true expertise, etc).
2) Symmetry in human affairs (fairness, justice, responsibility, reciprocity). e.g.: to get the rewards you must also get some of the risks; not let others pay for your mistakes.
3) Information in transactions
4) Rationality in complex systems.

The main aspect of "Skin in the game" (SITG) - a phrase probably made popular by Warren Buffet - is, in Taleb's view, about matching disincentives to incentives. For Taleb, SITG isn’t purely incentives (e.g.: just having a share of some benefits). It is SYMMETRY in both UPSIDE and DOWNSIDE. Taleb makes this important aspect extremely explicit since the very beginning of the book (page-4).

If some actors pocket rewards from a policy they enact or support (without accepting risks/downside), various economists consider it to be a problem of "missing incentives". In contrast, for Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, others are stuck with the risks. Forcing SITG corrects this asymmetry (you cannot make profits and transfer the risks to others as some large corporations do; bankers being bailed out by the public are the antithesis of SITG). Actors, per Taleb, must always bear a symmetric cost when they fail the public (this is SITG!). A fund manager that gets a percentage on wins, but no penalty for losing is incentivised to gamble with his clients funds. Bearing no downside for one's actions, means that one has no "Skin In The Game"

A few insights from the book:

- Having exposure to the real world, with upside and downside, is the best (often the only) way to learn.

- EXPOSURE TO REAL WORLD CONSEQUENCES beats Intellectualizing. Employed intellectuals, professional academics, or bureaucrats are rarely in love with thoughts & ideas. They are primarily in love with orthodoxies in their respective fields.

- There are some risks we just cannot afford to take (e.g.: systemic risks). There are some risks we cannot afford to NOT take.

- Intelligentsia have no downside for their actions (no SITG).

- There is no evolution without skin in the game. Note how most academics (Economists, Psychologists, Sociologists, Social Scientists, etc) can be wrong for so long, while MOST businesses cannot (except the likes of Goldman Sachs and others, provided the Government bails them out when they mess up)

- Government intervention, in general, tends to remove SITG, to weaken robustness in complex (economic, social, financial) systems.
- Interventionists don't suffer the consequences of their bad actions, policies, etc

- About the real world: think in dynamics, not statics. Think in high, not low dimensions. Think in terms of interactions as well as actions.

- SITG doesn’t literally mean an eye for an eye. It just means there is a downside large enough (for individuals) to protect the overall system.

- We know far more what is bad than what is good. Therefore, when treating others: no bad actions > good actions as a rule.

- Universal behavior is great on paper, disastrous in practice. Why? We are local and practical animals, sensitive to scale. The small is not the large; the tangible is not the abstract; the emotional is not the logical. Most behaviors do not scale. Family members are not friends and random people on the street are not friends. What's worse: the general and abstract tend to attract self-righteous psychopaths.

- Avoid taking advice from someone who gives advice for a living, unless there are also penalties for their bad advice.

- The doer wins by doing, not convincing. e.g. if someone is trying to convince you how cool their life is then it is not cool

- How often you forecast correctly is not so important. What matters more is which outcomes you can forecast correctly. The payoffs matter more.

- SITG can help with solving black swan problems. That which has survived over time, with SITG, has proven its robustness.

- People with SITG bring simplicity. People with SITG have no benefit for added complexity. Therefore be careful of people without SITG proposing complex solutions for a problem. They have incentive to seem sophisticated instead of just solving the actual problem

- The average behavior of the market participant will not allow us to understand the general behavior of the market.

- Careful of people who want more regulations as they have incentive to complexify it, so they are more needed.

- People can be largely collaborative except when institutions get in the way.

- Whenever there is a mismatch with "bonus period" (e.g.:1 year) and "statistical blowup" (e.g.:10 years) people will transfer as much risk as possible to the future (get the bonus in 1yr, worry about blowing up much later)

- Learning is rooted in repetition and convexity, reading one book twice is often more useful than two books once.

- Professional reviewers tend to want to impress other reviewers while normal people just say their opinions, so be careful of professional reviewers as they have a lack of SITG

- Freedom entails risks, real skin in the game. Freedom is never free

- Data does not imply rigor

- Never pay for complexity of presentation when all you need is results.

- Change for the sake of change is frequently the enemy of progress (inverse of the Lindy effect)

- You can criticize what a person said or what a person meant. One is honorable, the other is embarrassing

- Virtue is what you do when nobody is looking. Virtue is not something you advertise.

- Survival comes first, truth, understanding, and science later.

This book, as are also the author's previous works, is entertaining, but he rehashes a lot of his old material. I would recommend it as a stand alone for those who have not read the previous volumes of the Incerto series.

Good book but a bad Taleb book. Antifragile and Black Swan were great reads where I felt like I learned a lot, this book doesn't come close. He spends too much time attacking everyone and everything to deliver the same profound insight he normally does. I'll be preordering whatever he comes out with next, again, but this was a let down.

[TLDR] This practical and provocative book is mostly about:
1) Uncertainty and the reliability of knowledge (b/s detection, theory vs practice, cosmetic vs true expertise, etc).
2) Symmetry in human affairs (fairness, justice, responsibility, reciprocity). e.g.: to get the rewards you must also get some of the risks; not let others pay for your mistakes.
3) Information in transactions
4) Rationality in complex systems.

The main aspect of "Skin in the game" (SITG) - a phrase probably made popular by Warren Buffet - is, in Taleb's view, about matching disincentives to incentives. For Taleb, SITG isn’t purely incentives (e.g.: just having a share of some benefits). It is SYMMETRY in both UPSIDE and DOWNSIDE. Taleb makes this important aspect extremely explicit since the very beginning of the book (page-4).

If some actors pocket rewards from a policy they enact or support (without accepting risks/downside), various economists consider it to be a problem of "missing incentives". In contrast, for Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, others are stuck with the risks. Forcing SITG corrects this asymmetry (you cannot make profits and transfer the risks to others as some large corporations do; bankers being bailed out by the public are the antithesis of SITG). Actors, per Taleb, must always bear a symmetric cost when they fail the public (this is SITG!). A fund manager that gets a percentage on wins, but no penalty for losing is incentivised to gamble with his clients funds. Bearing no downside for one's actions, means that one has no "Skin In The Game"

A few insights from the book:

- Having exposure to the real world, with upside and downside, is the best (often the only) way to learn.

- EXPOSURE TO REAL WORLD CONSEQUENCES beats Intellectualizing. Employed intellectuals, professional academics, or bureaucrats are rarely in love with thoughts & ideas. They are primarily in love with orthodoxies in their respective fields.

- There are some risks we just cannot afford to take (e.g.: systemic risks). There are some risks we cannot afford to NOT take.

- Intelligentsia have no downside for their actions (no SITG).

- There is no evolution without skin in the game. Note how most academics (Economists, Psychologists, Sociologists, Social Scientists, etc) can be wrong for so long, while MOST businesses cannot (except the likes of Goldman Sachs and others, provided the Government bails them out when they mess up)

- Government intervention, in general, tends to remove SITG, to weaken robustness in complex (economic, social, financial) systems.
- Interventionists don't suffer the consequences of their bad actions, policies, etc

- About the real world: think in dynamics, not statics. Think in high, not low dimensions. Think in terms of interactions as well as actions.

- SITG doesn’t literally mean an eye for an eye. It just means there is a downside large enough (for individuals) to protect the overall system.

- We know far more what is bad than what is good. Therefore, when treating others: no bad actions > good actions as a rule.

- Universal behavior is great on paper, disastrous in practice. Why? We are local and practical animals, sensitive to scale. The small is not the large; the tangible is not the abstract; the emotional is not the logical. Most behaviors do not scale. Family members are not friends and random people on the street are not friends. What's worse: the general and abstract tend to attract self-righteous psychopaths.

- Avoid taking advice from someone who gives advice for a living, unless there are also penalties for their bad advice.

- The doer wins by doing, not convincing. e.g. if someone is trying to convince you how cool their life is then it is not cool

- How often you forecast correctly is not so important. What matters more is which outcomes you can forecast correctly. The payoffs matter more.

- SITG can help with solving black swan problems. That which has survived over time, with SITG, has proven its robustness.

- People with SITG bring simplicity. People with SITG have no benefit for added complexity. Therefore be careful of people without SITG proposing complex solutions for a problem. They have incentive to seem sophisticated instead of just solving the actual problem

- The average behavior of the market participant will not allow us to understand the general behavior of the market.

- Careful of people who want more regulations as they have incentive to complexify it, so they are more needed.

- People can be largely collaborative except when institutions get in the way.

- Whenever there is a mismatch with "bonus period" (e.g.:1 year) and "statistical blowup" (e.g.:10 years) people will transfer as much risk as possible to the future (get the bonus in 1yr, worry about blowing up much later)

- Learning is rooted in repetition and convexity, reading one book twice is often more useful than two books once.

- Professional reviewers tend to want to impress other reviewers while normal people just say their opinions, so be careful of professional reviewers as they have a lack of SITG

- Freedom entails risks, real skin in the game. Freedom is never free

- Data does not imply rigor

- Never pay for complexity of presentation when all you need is results.

- Change for the sake of change is frequently the enemy of progress (inverse of the Lindy effect)

- You can criticize what a person said or what a person meant. One is honorable, the other is embarrassing

- Virtue is what you do when nobody is looking. Virtue is not something you advertise.

- Survival comes first, truth, understanding, and science later.

This book, as are also the author's previous works, is entertaining, but he rehashes a lot of his old material. I would recommend it as a stand alone for those who have not read the previous volumes of the Incerto series.

Good book but a bad Taleb book. Antifragile and Black Swan were great reads where I felt like I learned a lot, this book doesn't come close. He spends too much time attacking everyone and everything to deliver the same profound insight he normally does. I'll be preordering whatever he comes out with next, again, but this was a let down.

‘The Black Swan’ saw Nassim Nicholas Taleb at the forefront of statistical literature for the layman, but ‘Skin in the Game’ is a significant step back. Most of the ideas in this book are characterized by a lack of nuance, are supported only by misrepresentation and overgeneralization of small samples, and might make the system worse if implemented. If one cherry-picks the data, one can make just about any hypothesis of choice sound convincing. It is often what is left out in the data that matters more than what is mentioned. And as much as I’d like to offer a refutation of all the inaccurate ideas in this book, the store has a 5000-word limit on reviews; I prefer to save the words for analyzing the central idea of this book (“skin in the game”) and a recurring idea (“the Lindy effect”). But if I am claiming that the book contains flawed statistical arguments, at least one example is in order.

p.11: “The idea of skin in the game is woven into history: historically, all warlords and warmongers were warriors themselves, and, with a few curious exceptions, societies were run by risk takers, not transferors.” This is followed by a paragraph in which Taleb writes about the bravery of a few emperors who died on the battlefield while fighting shoulder-to-shoulder with their soldiers or while taking “frontline position in battle,” and then he continues: “These are not isolated anecdotes. The statistical reasoner in this author is quite convinced: less than a third of Roman emperors died in their beds—and one can argue that given that only few of these died of really old age, had they lived longer, they would have fallen either to a coup or in battle.”

A number of things are happening here.

Taleb first prefixes the argument with “these are not isolated anecdotes” and then classifies “less than one-third of Roman emperors who died in their beds” into one category. This gives the reader a strong but false impression that roughly two-thirds of them died in battle. (Analyzed below; it’s not remotely close this number.) But at the same time, this also maintains a level of deniability about ever stating that two-thirds of them died in battle, especially since he subtly mentions coup at the end. The reality, of course, is much less awe-inspiring and much more nuanced. What he has not mentioned here is that in his data on the deaths of Roman emperors, he is actually combining the minority of deaths in battle and the majority of deaths from covert assassinations, suicides, and post-coup executions into a single unstated category to give it the overall appearance of brave warriors with skin in the game. [Also, see addendum at the bottom of this review.]

Now, we can all agree that emperors who, while they were emperors, fought alongside their soldiers on the battlefield were indeed brave and had a lot of skin in the game. But in other forms of unnatural death, does merely dying from coups and assassinations while going about the business of daily life possess battlefield-style skin in the game? It does not.

Usurpers who engage in foul-play assassinations, conspiracies, and coup attempts are always a threat to anybody in power—Roman emperors, modern dictators, presidents—and if they are rarer now than in ancient history, it’s because our security systems are a lot more sophisticated at detecting and eliminating such threats. Merely being the target of an assassination/coup is not, by any stretch of the definition, battlefield-style skin in the game. And nor are post-failure suicides. Even Hitler committed suicide after losing WW2 without fighting in a single battle of this war.

So to analyze this further, and to keep the analysis logically consistent with the contents of p.11, I’ll first define ‘an emperor dying in battle’ as either 1) dying while fighting shoulder-to-shoulder alongside the emperor’s own soldiers on the battlefield, while executing his own plans, or 2) being captured while fighting in this manner and dying in captivity.

The moment you separate other forms of death from dying on the battlefield as defined above, the data ceases to be impressive. Following are the data on the deaths of Roman emperors. Verify, if you must, by looking up “list of Roman emperors”.

1. Julio-Claudian dynasty (27BC – 68AD) – 5 emperors; 0 deaths in battle; 1 natural death; 1 cause unknown; 1 suicide; 2 assassinations
2. Year of the Four Emperors and Flavian dynasty (68–96) – 6 emperors; 1 death in battle; 2 natural; 1 suicide; 2 assassinations
3. Nerva–Antonine dynasty (96–192) – 7 emperors; 0 deaths in battle; 6 natural; 1 assassination
4. Year of the Five Emperors and Severan dynasty (193–235) – 8 emperors; 1 death in battle; 1 natural; 4 assassinations; 2 executions
5. Crisis of the Third Century (235–285) – 22 emperors; 6 deaths in battle; 3 natural; 2 suicides; 11 assassinations
6. Tetrarchy and Constantinian dynasty (284–364) – 15 emperors; 3 deaths in battle; 6 natural; 2 suicides; 2 assassinations; 2 executions
7. Valentinian dynasty (364–392) – 4 emperors; 1 death in battle; 1 natural; 1 possibly suicide; 1 assassination
8. Theodosian dynasty (392–455) – 7 emperors; 2 deaths in battle; 3 natural; 1 assassination; 1 executions
9. Last emperors of the Western Empire (455–476) – 10 emperors; 0 deaths in battle; 3 natural; 3 assassinations; 2 executions; 2 unknown causes

All that adds up to:

Battle-related deaths: 14
Natural deaths: 26
Suicides: 7
Assassinations: 27
Executions after coup: 7
Unknown causes: 3

Total: 84

Thus, only 17% of all the deaths of Roman emperors took place while fighting alongside their soldiers on a battlefield. Taleb takes a small subset consisting of 14 battlefield deaths, clubs it with the much larger subset of 44 other unnatural deaths, and makes blanket generalizations about how skin in the game was too common back then.

Secondly, there’s another misleading phrase in that quote. Without specifying what “really old age” is, Taleb says of Roman emperors who died naturally that “only few of these died of really old age.” This obviously leads the reader to assume that most emperors of this group died naturally at a “young” age and would’ve bravely fought to the death otherwise, but quite the opposite is true. 14 of the 26 emperors in this group lived past the age of 60, with the average for these 14 being 67 years—and this was almost 1700 years ago! Of course, the advantage that ambiguity affords is that one can always retort, “by ‘really old age’, I meant XYZ.” Clear, unambiguous presentation of facts and figures in a statistical argument is of paramount importance, even in a non-technical book. Perhaps no other field of human knowledge is so prone to misinterpretation as statistics can be.

Finally, and most importantly, there’s a good reason why high-ranking commanders of modern armies, the “decision-makers,” are precluded from joining their armies on the battlefield regardless of how good their plans are: Strong military acumen is an extremely rare but highly valuable commodity. (Wars are won with brains, not bullets.) Those who possess it are to be protected so that their wisdom can be applied to future missions. But even when their battle plans are carefully thought-out and diligently maneuvered, there WILL be unavoidable causalities. In executing these plans, if these commanders are out there on the battlefield with their men, they could potentially take a hit and all their acumen would die with them. The real loss, then, is to the future missions that would be left without the guidance of that fallen commander. Case in point: Both Gen. Albert Sidney Johnston and Gen. Stonewall Jackson of the Confederate Army used to personally lead their men on the battlefield, and both died in two separate friendly fires during the Civil War, in 1862 and 1864 respectively. The deaths of these two generals are considered by military historians to be two of the twelve turning points in the American Civil War. Learning from such mistakes, high-ranking commanders of the Allied troops issued orders from highly secure locations, and won WW2. Ultimately, winning the war is more important than showing heroism on the battlefield; the fate of the people, not just the soldiers, lies in the outcome of the war.

So in summary, the fact that some historical commanders had skin in the battle was actually a reckless error that has been fixed by modern armies. Any recommendation to revert back to that model of the world is thus thoroughly misguided.

The above example is typical of most erroneous arguments in the book. But now let’s move on to the central theme of the book: Skin in the game.

Skin in the game isn’t just a reward-punishment model; punishment is what a centralized justice system does AFTER erring. Rather, it’s a decentralized, reward-or-punishment-through-risk-exposure model where your exposure to the consequences is ensured BEFORE the implementation, so that erring automatically punishes on its own. It’s (supposedly) a self-corrective model, and the essential ingredient of skin in the game is downside personal risk.

Now, there are not two but four combinations of idea-consequence scenarios that can be neatly represented as below.

The premise: You present an idea to the world, which is then implemented. In all four scenarios listed below, other people are respectively affected as a result of the implementation, but the ramifications for you are different in each.

1) Symmetry: You gain something valuable (to you) if it works, and you lose something valuable if it doesn’t.
2) Positive asymmetry: You gain something valuable if it works, but you lose nothing if it doesn’t.
3) Negative asymmetry: You gain nothing if it works, but you lose something valuable if it doesn’t.
4) Neutral: You gain nothing if it works, and you lose nothing if it doesn’t.

(1 and 3 are skin-in-the-game scenarios; 2 and 4, not)

The front-cover illustration and subtitle of this book give a false impression that this book is a crusade against positive asymmetries—the “heads I win, tails you lose” bets. I would have showered this book with so much praise as to exhaust the nation’s supply of accolades if this book really were about replacing only asymmetries with symmetries.

But sacrificing nuance, Taleb goes all the way to the other extreme and says that every idea-consequence situation must be symmetrical. (Along with numerous instances throughout the book, he ends the book by suggesting “[do] nothing without skin in the game.”) In a nutshell, Taleb argues that skin in the game eliminates bad ideas by disfiguring both the reputation and the bank accounts of those who concocted the ideas. An investment advisor who is investing your money with his ideas should have a significant personal stake in the same fund. If the idea fails, he almost drowns in bankruptcy and nobody will ever take his investment advice seriously again. Over time, many similar events will eliminate other bad ideas and the people who parented those ideas. As a result, the system overall is better off, and it is precisely skin in the game that allowed these self-corrections to happen. In a non-skin in the game environment, such people can persist.

Sounds great, and symmetries are indeed well suited to some situations. But the problem is that this solution is not at all generalizable and is very restricted in its applicability. Recall that there are two kinds of non-skin in the game scenarios, and if applied to the wrong one, Taleb’s model harms the system more than it rehabilitates it.

Which brings us to the dark side of skin in the game.

Many decades ago, Stanley Kubrick, the acclaimed filmmaker, pronounced his verdict on human nature in this eloquent quote: “We are capable of the greatest good and the greatest evil, but the problem is that we often can't distinguish between them when it suits our purpose.”

Paraphrased to befit the context of this review, the above quote simply says that anyone who has their skin in the game will do just about anything to save their skin. They will lie, cheat, deceive, exaggerate, lobby, wield power, or do a million other wicked things just to save their own skin.

Here are some ways in which skin in the game, by incapacitating the ability of the skin-owners to tell the difference between good and evil, can harm the system:

1. Taleb maintains that skin in the game and conflict of interest should not be conflated, but he doesn’t recognize that if, as he recommends, politicians were to have their skin in the game, it would inevitably lead to conflict of interest as a nasty side-effect. The reason why the powers-that-be, economic advisers to the president, and top-level bureaucrats are required not to have any skin in the game is because it’s a textbook example of conflict of interest—they could use the power of their office to recommend or implement only those policies which save their own skin, while the benefits for others might not be as, or at all, profitable. Carl Icahn, who is currently under federal investigation, briefly served as Adviser to the President and attempted to use the power of his office to save himself $200 million in taxes through a biofuel company that he owned. (He was allowed to have skin in the game because of bureaucratic loopholes; normally, this is rightly prohibited.) If someone has skin in the game and the government-given power to save their skin, they will do just about anything to save their own skin. [It’s worth adding here that additional checks, which currently do not exist, must be in place to ensure that even a conflict-of-interest-free public servant doesn’t directly profit from the policies they implemented, after they leave the office]. However, someone who has the official power but who has nothing to gain or lose (as in the case of pure neutrals), either in the present or in the future, is more likely to do good to others rather than serve himself like Icahn did.

2. Financial skin in the game is the reason why tobacco companies, despite their own research showing that smoking tobacco is strongly correlated with lung cancer, suppressed those findings, lied to the public for decades that there is no evidence, let millions die of preventable cancer, were taken to the courts and conclusively shown to have known about the findings for decades, and were sued for billions—all in a misguided attempt to save their invested skin. And unsurprisingly, owing to skin in the game, something very similar is happening with oil companies now. (Read Oreskes and Conway’s ‘Merchants of Doubt’ for more on this). Along with the rest of mankind, these people and their descendants will also be exposed to the downside risk of carbon emission—so there’s both financial and literal skin in the game, but that doesn’t stop them from misguiding the public. All these companies lose a lot of money should things not go in their favor, and make a lot of money otherwise, so they are never open about their data or their true intentions—a typical symptom of skin in the game.

3. Not having any skin in the game lets you think objectively about a situation in a way that having your skin at stake hardly can. The slave-holding states of the American antebellum South wanted to secede from the Union primarily, though not solely, because of the issue of slavery. The abolitionists of the North had no skin in the cotton production game; only the southern cotton plantation/industry owners did, and cotton was the prime mover of the Southern economy. Slavery was crucial to the cotton business, and the slave-holding states of the South would have taken a huge economic hit if slavery were abolished. Small wonder, then, that the South wanted to keep slavery alive by seceding from the Union, thus initiating the Civil War. Slavery did not resolve itself at the hands of those with skin in the cotton game. It took the intelligence and objectivity of non-slaveholders—the abolitionists of the North who, if the logic of this book were applied, would be labeled “virtue signalers”—to rid the US of slavery and better the system. It was Lincoln and his cohorts, not slaveholders or Southerners, who ratified the Thirteenth Amendment to the Constitution, the one abolishing slavery.

The best way to tell the difference between good and evil is to take your skin OUT of the game and then decide.

But the point is, both skin in the game and no skin in the game have their place; it’s a matter of what works better given a careful evaluation of the context. However, such nuanced analysis is foreign to the simplistic, often superficial methods prescribed in this book.

Coming to the second recurring theme in the book, the Lindy effect: This idea is mathematically beautiful but ultimately stands on quick soil. (Taleb generally likes to point out that you cannot question the mathematics of his published papers if you cannot show what is wrong with the it, but the problem isn’t with the mathematics; it’s with the assumptions that get you started. Kurt Gödel once “proved” that God exists using mathematical logic; see Gödel's ontological proof. What’s not above criticism, though, are his assumptions—nor anybody else’s.) In essence, it states that the projected lifespan of non-perishable cultural entities is in direct correlation with its current age. If a book has survived for 100 years in print, it will likely survive another 100.

If you are familiar with ‘the Wisdom of the Crowds,’ it only takes a small leap of imagination to arrive at the Lindy effect: Lindy is nothing but the Wisdom of the Crowds applied across time. At its foundation, both ideas require people—lots of common, hardworking people—who make collective decisions about accepting or rejecting an idea through small decisions that accrue. In the Wisdom, the decisions accrue across space; in Lindy, across time. But in both, it is the hoi polloi—and not the academics, the bureaucrats, or some other group of chosen experts—who truly put the ideas to the test.

Studying the Wisdom sheds light on the nature of Lindy, and to that end I’ll quote an insightful excerpt from an essay by Warren Buffett that decries the Efficient Market Hypothesis, an absurd, absolutistic theory built on the Wisdom of the Crowds: “EMH was embraced not only by academics, but by many investment professionals and corporate managers as well. Observing correctly that the market was FREQUENTLY efficient, they went on to conclude incorrectly that it was ALWAYS efficient. The difference between these propositions is night and day.” (emphasis mine)

Lindy is indeed good at eliminating some bad cultural objects from the past. But since Taleb states that “Lindy and Lindy alone is the real expert,” I think Lindy’s consistency is worth examining. Is Lindy only frequently or always effective? The difference matters. A lot.

My first brush with the core assumption underlying this idea—though not the idea itself—was in Taleb’s ‘Fooled by Randomness’. In that book he is careful to distinguish between survival through chance and survival through competence. A stockbroker can have a long career making successful bets, despite being clueless about stocks. The laws of stochastic probability make room for such anomalies. However, a dentist or a doctor can have a long career if and only if they are competent, and no law of probability will rescue them otherwise. It’s not really malpractice lawsuits or losing medical license that removes them from the profession, although that contributes, too; rather, it’s public verdict that nails their metaphorical coffin: You cannot fool people for long stretches of time in a profession where luck plays no role.

Or so I thought.

I learned this many years later: The case he makes for non-stochastic professions turns out not to be true at all and illuminates a critical fault in the assumptions that Lindy stands on. Not only can incompetent doctors have decades-long career, but there actually is a precedent for it.

The noise caused by the placebo effect can sometimes deafen people to the inefficacy of most alternative medicines, which generally treat non-life-threatening conditions. But there is one particular case of a “doctor” in South Asia whose “cure” for the most intractable of human miseries—cancer—essentially makes it impossible to fail to tell the difference between success and failure of the medicine for long periods. If any alternative medicine practitioner claims to have a cure for cancer, the claim can be put to the test as easily by the public as by scientists. People should, given a decade or more of hearsay, arrive at an accurate verdict about the efficacy of the treatment—if Lindy really works.

This healer goes by the name of Vaidya Narayana Murthy who, along with his ancestors for centuries, has been “curing” all forms of cancer and other incurable ailments by making the patients ingest crushed pieces of tree barks grown in his native village. He boasts of a success rate of 60%., clearly fabricated, since he would be awarded the Nobel Prize in Medicine if he could cure any cancer, let alone all forms of cancer, with that level of success. Every week, an exodus of gullible, illiterate, and even semi-literate people from all across the country arrive at his doorstep and stand in miles-long queue for hours to get a 10-second appointment with him. If Lindy were to be an expert, such oddities would necessarily have to be eliminated over time as people realize this man’s incompetence and stop seeking his appointments, regardless of how much he charges for the appointments—but quite the opposite is happening, as his patient numbers rise every year. Even his online ratings are consistently high. Nothing about these people remotely suggests that you can’t fool them for long, even at something so basic as detecting the efficacy of a cure for cancer.

Many more such examples abound. When Lindy cannot even eliminate incompetence in simple systems like detecting the efficacy of cancer cures, to expect it to arrive at reliable heuristics in complex systems in the form of time-tested aphorisms is just wishful thinking. Aphorisms survive because of their rhetorical effect, not necessarily because they are agents of truth. Only by cherry-picking them can one present them in a positive light. Superstitions survive for thousands of years, and horrible myths that are demonstrably untrue are inherited through generations of descendants, completely unfiltered by Lindy. (Conversely, many great books of science and math from the antiquity, including five books by Euclid, have been irretrievably lost, unprotected by Lindy.) In India, a practice called “sati”—in which a widowed wife would be cremated alive with her husband’s corpse—prevailed for more than 1500 years before it was forcefully abolished in 1821 through government intervention. Lindy tolerated it for 1500 years; bureaucrats and reformers ended it in just 15. It’s generally not a good idea to make hard life choices based on one-liners handed down from the social wisdom of the ancients, the Romans, or any other people who owned human slaves and committed atrocities for recreation.

This book is filled with vignettes from classical literature, perhaps to give it the feel of Lindyness. Taleb likes to chastise psychologists, but psychologists have also committed the same error in abundance: Drawing too much inspiration from ancient vignettes. Freud was inspired by the vignette of Oedipus when he came up with his weird hypothesis of Oedipus complex. Jung produced an equally weird variant called the Electra complex after the Greek mythological character. Another complex of this ilk, also inspired by classical Greek stories, goes by the name of Jocasta complex.

Romanticizing the genius of the elders can produce absurdity, not always profundity. Even evolution by natural selection, which Taleb claims is a sophisticated form of skin in the game, is only a crude method of problem-solving that doesn’t eliminate all errors, no matter how much time passes. Cancer genes can survive in a species for millions of years.

However, none of this is to say that Lindy is completely useless. In the philosophy of science, consilience is a method of converging on the truth through multiple, independent sources of evidence that are themselves imperfect and prone to errors. We know that the theory of evolution is true not just because fossils hint at it, but because seven independent sources of evidence converge at the same conclusion. A theory which is supported only by one form of evidence is a lot weaker than a theory that is vindicated by multiple sources that do not depend on each other. In the event of a disagreement between sources—which is bound to happen given that each source is imperfect—all it means is that further investigation is needed, not that one source is necessarily better than the other, or that the other source must be discarded altogether. In consilience, Lindy can act as one of these independent sources, rather than replacing other sources.

I have so much more to say, enough to fill a book, but I’m close to the end of my 5000 words. I will make this last, important point, though. Murray Gell-Mann, Nobel Laureate physicist and one of the brightest minds of the 20th century, is rightly praised in this book for his deep understanding of complex systems. Gell-Mann wrote an influential non-fiction book in 1994 called The Quark and the Jaguar, which contains illuminating discussions on simple and complex systems.

Now, Taleb often says that climate change is a non-linear, complex system and therefore we cannot, as climate scientists often do, predict the future trajectory of climate change with sufficient confidence. But here let me quote an excerpt from a 2011 interview with Gell-Mann precisely on this topic, which can be viewed on YouTube under the title ‘A chat on climate literacy with Murray Gell-Mann’.

“Is it really, really so extremely difficult to persuade people that climate—which is not weather but average weather—can have three contributions that add to each other? That is, some cyclical effects, some random noise, and a secular, steadily rising trend from human activity. … This isn’t even science; it’s ordinary arithmetic. … Can people really not grasp this trivially simple idea that you have the sum of these three terms, and if we wait until the secular term—the anthropogenic term—gets really, really big so that it drowns out the other two, it’s too late to do anything? … Isn’t it just an arithmetic problem, the idea that you are taking the sum of these three terms and that they behave differently? I mean, if you are used to graphs, you can appreciate it immediately. Is it that hard to introduce the public to the notion of a graph? … The thing that I’m talking about is not the whole issue; just this trivial point about the sum of the three terms: 1) the random fluctuations, 2) the cyclical behavior—because the deniers talk about cycles, and they’re right, there are cycles and there are random terms—and 3) there is also the secular term. And I don’t understand why the people who are supposed to educate the public cannot get this across.”

Climate change may be a complex system, but it does contain predictable elements. Simple arithmetic summations like adding three contributions to each other wouldn’t have worked on it otherwise. It’s important for public intellectuals with a voice to get this point across and not deny it.

Final verdict: Too many logical missteps, too many contradictory facts ignored, too few cases analyzed, and unjustifiable assumptions about human nature make this book not worthy of recommendation.

Addendum: Regarding the analysis of p.11 at the top of this review, Taleb replied to me in a separate post that on p.176, he mentions that four “bad Roman emperors” died of assassination or suicide. However, this doesn’t, in any meaningful way, help the reader see the clear facts of the case because:

1. These two pages, p.11 and p.176, are separated by 165 pages. No reader is reasonably likely to remember or connect subtle statistical facts and fallacies, in two different contexts, for that long.
2. Even here the opportunity to present the data in a lucid, unambiguous manner is not utilized. The distinction between battlefield-style skin in the game and other forms of death—a distinction that is central to his argument about emperors being exposed to the consequences of their own war plans—is not laid out.

Only those well trained in Statistics 101 can put all of these disparate, separated facts together into a cohesive whole, and even they can do that only if they have the unmentioned data at hand. By and large, most readers would be unmistakably misled, and that includes me, too. It’s only because I made the deliberate effort to fact-check the data on Roman emperors that I saw the flaw in the presentation and the logic.

On pages 5 & 6 of Antifragile Nassim encapsulates the basic premise of Skin in the Game as the “largest fragilizer of of society.” It is, in a nutshell, “antifragility-at-the-cost-of-fragility-of-others.” He goes on to explain that such fragility is hidden “owing to the growing complexity of modern institutions and political affairs.”

In SITG, Nassim speaks of “Those Hidden Asymmetries and Their Consequences.” Negativa, the agency problem, and other themes are reworked and reintroduced.

The author does offer insights worth considering, such as how the minority may dictate majority behavior and acquiescence, scale transformation, and bias-variance tradeoff.

Nassim’s indefatigable attacks on those he deems unworthy are becoming tiresome. He may be developing a complex; time to put down the put-downs.

I would have given this review less stars but, c’mon, it’s Nassim Taleb we’are tak’n about. I appreciate his effort but, not up to the high standard I have come to expect from the master.

some good ideas but also somewhat disjoint. also a lot of ideas are good...but some are clearly nonsense, too. read it with a critical eye (or listen with a critical ear).

he's really down on academics who don't have "skin in the game" possibly because academics dont like him? (sour grapes)

he contradicts himself from time to time...a cafe where quite some time ago someone discovered that a broadway show's expected time to survive is however long it's been playing? but he says the cafe itself wont survive much longer...

I was excited to receive this book after pre-ording it via the store months before it was actually released. After quickly reading through the introduction and first few chapters, I quickly realized that Black Swan was, and will remain Nassim's best work. Up front, this book can only be compared to a conscious stream of misguided observations, directed disagreements with other's professional works and egotistical rambling. I have better things to do with my time.

Nothing to do with his previous amazing books...reasoning is pretty weird in many parts and the book is just permeated by a sense of hate towards academics or anyone that does not have any skill in the game: delusional

There is a moment or two of coherence but nothing more than that. You don’t have to read too terribly long before the author’s self indulgence and non evidentiary protocols belie any credibility the author brought to the work.

This is my new favorite book, if you are familiar with his others then you will love this one.
I like his writing style and depth of knowledge: There is a lot of references and explanations of the classics AND of course his theories, like the "barbell" and of course the Antifragile theory.
The latter is mind-blowing. Way to deep to explain here - just read the book!
Thinking out of the box guaranteed AND maxims to live by!

Without detracting from some good points he makes, I write to criticize one point Taleb made, perhaps because he doesn't comprehend the full spiritual meaning and impact of Jesus' Golden Rule, "Do unto others as you would have them do unto you." Taleb prefers what he refers to as the Silver Rule, He says, "The Golden Rule wants you to Treat others the way you would like them to treat you. The more robust Silver Rule says Do not treat others the way you would not like them to treat you... it tells you to mind your own business and not decide what is 'good' for others. We know with much more clarity what is bad than what is good." (page 19)"

Spencer Heath MacCallum, a long-time, long-lived and highly respected libertarian provides a more comprehensive and nuanced understanding of Jesus' formulation of his version of the Golden Rule in an essay entitled, "The Teacher of Galilee, A Seer Who Really Did See." He points out that Jesus' advice anticipated the free market and entrepreneurship many centuries before those concepts evolved: He writes:

"The teacher of Galilee was arguably a seer who really did see; for among all the world’s religious precepts, his alone is consonant with free enterprise. The vision of all others was that men should desist from the hurt they do one another, thus to escape the scourges of the ancient world. The Nazarene showed in a practical manner how to do that, and a whole lot more. He showed how to effectively overcome evil—by displacing it with good.The free-market process consists in people doing good for one another, not in refraining from harm as other religions [versions of the rule] counsel...

"Some prefer the negative precepts [viz., Teleb's Silver Rule] expressly because they are negative. They fear that the positive command might open the door to mischief, that it could be invoked to justify imposing one’s tastes on others. Am I, for example, who like curdled milk, called upon to serve it to you, who hate it? And what of the masochist? Any such interpretation of the Galilean precept makes nonsense of a rule intended to apply to everyone. The commandment of the Galilean admits of only one reading that can be universalized; for only the how of the doing, not the what, can be applied across the board. So we are enjoined to do unto others as we would have them do unto us, which means in a certain manner, namely, with regard for the other person’s wishes in the matter. And even the masochist wants that."--Spencer Heath MacCallum

A very interesting compilation of thoughts from a unique perspective. Taleb as usual has a contrarían look at just about everything and he often makes a good argument as to why one shouldn't take a lot of history, economics, psychology and other disciplines at face value. He is nothing if not opinionated.

This latest Taleb book is pure genius. The central premise is an expansion of chapter 23 (p.375) in Antifragile: it is zero sum games that are causing all the planet's problems (I'd add zero sum male games, but that's just me). Like Antifragile, this book will become a must read over and over in your armory of life lessons. As in the Skin in the Game Antifragile chapter, Nassim calls this zero sum "asymmetry of risk" but his practical yet poetic, hard hitting points sentence after sentence really become a new Profiles in Courage.

Unlike his buddy Pinker (see our review of his new book, also a planet-changing part of a duet not unlike Das Kapital vs. Origin of Species), Taleb is a devout Christian, and uses the Orthodox fast as an example of skin in the game, hearkening back to the sufferings and sacrifices of the world's Prophets to bring about evolutionary change. It is a refreshing contrast to Pinker's Atheism to see Social and Economic Justice, though sharply mathematical and scientific, also fearlessly remembering God. And it TAKES that kind of skin in today's academic milieu!

The KEY here, both for personal joy and evolution, and the planet's, is the power of the "minority" to bring about Economic Justice ("symmetry") despite powerful forces arrayed against it. And a minority is not now just a homogenous set (women, African Americans, Native Americans etc.) in Taleb's incredible re-definition, it is ANY smaller group (including heterogenous, hearkening to the white supporter of MLK or the Muslim supporters of persecuted Baha'is in Iran), with the COURAGE to promote symmetry.

I'm personally a more conservative old, white, female mathematician, but I find Taleb's bridging of differences with the concepts of symmetry and zero sum games so ably launched in Antifragile a real potential bridge in the vast divides shaking planetary civilization to its core. I have colleagues who read ANTIFRAGILE a minimum of two to four times a year (and at 500 pages that's no mean feat). I predict Skin in the Game, as a wonderful expansion of chapter 23 there, will become a similar delight. Highly recommended.

Disclosure: although I bought both the hard copy and Kindle version personally, Nassim/publisher also sent an advance review copy, and although the idea was more going in detail over the math in the appendices, I've chosen to give a more general take. To reviewers who have slammed the math, I will be happy to go toe to toe with you on the stats in other forums, as a general review is not the place to get into gamma functions, but the math IS solid and insightful, and corrects a number of inaccuracies in, for example, Marx's theories of social and economic justice, particularly in the means of production.

What I'd add: I'm on the numerical analysis/ computer science side of computational math, and I'd suggest Dr. Nassim expand his approach to include amazing new IT tools and technologies that have the potential to IMPLEMENT Economic Justice an Skin in the game, such as Blockchain technologies.

Another one of Taleb's challenging but insightful books. It is challenging on two points: first, when Taleb starts talking probabilities and first order problems and other such abstract concepts I quickly start fading; second, Taleb also in name-calling and labeling his intellectual and policy enemies (some of whom probably deserve it) but it makes me feel that if I ever met him in person he would size me up, dismiss me, and include as an example of some ignorant, arrogant faux intellectual (all of which are true) in his next book. But the main point of the books is clear even if somewhat obvious in hindsight - pundits, policy makers and bureaucrats who don't have skin in the game - who are not subject to the consequences of their decisions - make very bad and very dangerous decisions. Examples of these characters abound, but perhaps one of the most egregious is Robert Rubin, who earned $100 million from Citibank during the financial crisis and got off scott-free. No skin in the game; no consequences; filthy rich. Taleb's perfect example is from the Code of Hammurabi that provided for an architect's execution should one of his constructions collapse and kill someone. Surely we moderns can come up with something similar that is not fatal. One of his recommendations is to push decisions making to the local level as mush as possible. I agree. It's on the ground where people live and receive the consequences from decisions from on high. These decisions would be more rational, realistic and compassionate if they were as close as possible to the people whom they would affect.

I really like this book because it provides a lot of philosophical ideas that I have never really thought about before. For one thing, "skin in the game" os an important concept in terms of ensuring that people assume their own risks and not take risks that are passed onto others. In any thing where this inbalance happens, we see a lot of problems arising, especially in the financial system. For instance, a lot of Wall Street banks were able to take huge risks, but because they did not have "skin in the game" -- they were able to pass off all of the risks onto others, the public. This is where a lot of inequity happens. Further, a lot of the elections around the world where people have been rising up against the "elite" is really a matter of the public opposing situations where people take risks but pass the risks onto others. That really is not a sustainable system long-term, as Taleb shows. Another central idea in the book is that anything that has survived a long time and has experienced stresses is probably durable long-term. Only time can really explain what is anti fragile and what isn't, though. Some Ivory Tower elitist is not able to tell you what should work or what doesn't. How can they possibly know every single variable?

struggled through all the prologs. Sooo many references to prior books that I felt like I was in a group that talked with inside jokes. I am not certain if I can finish it. Not interested enough to read any other books by this author. Skip it