Top positive review
Skin in the Game: Heuristic to cut through the BS & get the real deal
19 September 2018
This book introduces an important filtering mechanism to get the real deal in life. "Skin in the game" is about getting the agents to not only enjoy the upside of their actions but also claim the downside of the consequences emanating from those actions.
This is important in the longer run, because non perishable things such as ideas, lifestyle, dietary habits, religions that have survived for a long time, being sufficiently stressed by time, will survive for much longer (Lindy's Effect). But the critical piece here is that the agents espousing these non-perishables should have a skin in the game.
The contrast is the rent seekers, or bureaucrats who only get the upside of their actions (bonuses), but pass on the downside to others citing uncertainty. Thus they get to be in decision making for a long time without being affected by the ill-effects of those decisions.
The book applies the heuristic to multiple areas. Interesting concepts covered in the books include Minority Rule (How intransigent minorities determine the preference of majority), Intellectual Yet Idiots (People who confuse complex systems for simple systems, and prescribe appealing but harmful solutions), Rationality of Religions (The do's & dont's in Religions inspire actions from followers, and these actions have enabled the adherants to survive. Rationality can only be discussed in the context of survival, or rather the avoidance of systemic ruin).
As usual Taleb is witty, names names (Bob Rubin, Thaler, Saudi Princes), acerbic but very insightful.
One thing that Taleb misses out on is application of Lindy's Effect to the relatively longer survival of Lithuanians, Irish and the Hindus who did not have the warrior but the priestly class at the top. Societies which had a warrior class at the top caved in to the invasion by semetic religions in a very short duration. However the adherants of these religions resisted converting to the invading Semetic religions for the longest period. So Lindy does seem to have a role to play here.
Final word: Excellent book. Will be revisiting this one many more times.