“Skin in the Game” by Nassim Taleb TLDR

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.”

Taleb seeks to uncover the hidden asymmetries in daily life, missing incentives, and IYI’s (intellectual-yet-idiot’s). The Skin in the Game thesis translates to having a measurable risk when taking a major decision— is necessary for fairness, commercial efficiency, and risk management, as well as being necessary to understand the world. This is part of Taleb’s multi-volume philosophical essay on uncertainty, titled the Incerto, which includes Fooled by Randomness, The Black Swan, Antifragile, and The Bed of Procrustes. Here’s a few notes I jotted down while reading the book.

IYI refers to the semi-intelligent well-pedigreed “who are telling us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think… and 5) who to vote for”. They represent a very small minority of people but have an overwhelming impact on the vast majority because they affect government policy. IYI are often policy makers, academics, journalists, and media pundits.

A theory that does not present a set of conditions under which it would be considered wrong would be termed charlatanism— it would be impossible to reject otherwise.

As a a Spartan mother tells her departing son “with it, or on it”, meaning either return with your shield or don’t come back alive (the custom was to carry the dead body flat atop of it) because only cowards throw away their shields to run faster.

If your opponent is of choleric temper, seek to irritate him. Pretend to be weak, so that he may grow arrogant. —Sun Tzu

Any system where people are judged by peers rather than survival, is a system that’ll blow up because it counters evolution. so if you let restaurants judge other restaurants (peers rather than clients) the quality would be great, however people are insulated by their decision’s consequences”

Universal behavior looks great on paper, but disastrous in practice.

The curse of modernity is that we are increasingly populated by a class of people who are much better at explaining than understanding.

Decentralization is based on the simple notion that it is easier to macrobullshit than it is to microbullshit. But don’t worry, if we do not decentralize and distribute responsibility, it will happen by itself, the hard way: a system that doesn’t have a mechanism of skin in the game, with a buildup of imbalances, will eventually blow up and self repair that way. If it survives.

Purely monotheistic religions such as protestant christianity, islam (irrevocable), or fundamentalist atheism accommodate literalists and mediocre minds that cannot handle ambiguity.

DECENTRALIZATION IS CONVEX TO VARIETY

“The market is like a large movie theater with a small door, and the best way to detect a sucker is to see if his focus is on the size of the theater rather than that of the door. stampedes happen in cinemas, because those who want to be out do not want to stay in. exactly the same unconditionality we saw in the kosher experience or panic selling in the market circa 2008”

Media is affected by monoculture.

In a buy/sell, asymmetry becomes equal to theft.

Had science operated by a majority consensus, we would still be stuck in the middle ages and Einstein would’ve ended as he started; a patent clerk with fruitless side hobbies.

“Never doubt that a small group of thoughtful citizens can change the world. indeed, it is the only thing that ever has” — Margaret Mead

The more you have to lose, the more fragile you are.

What matters isn’t what a person has or doesn’t have; it’s what he or she is afraid of losing.

Cursing today is a status symbol of freedom, just as oligarchs in Moscow wear blue jeans to special events to signal their power.

“Dog or a wolf? — Aesop once said the dog boasts to the wolf about all if the contraptions of comfort and luxury he has, almost prompting the wolf to enlist. until the wolf asks the dog about his collar and is terrified when he understands its use— “of all your meals, I want nothing.” he ran away and is still running.”

An employee is (by design) more valuable inside the firm than outside of it; that is, more valuable to the employer than the marketplace. — Ronald Coase

Roman families would customarily have a slave as the treasurer because they’re able to inflict a much higher punishment on a slave than a free man.

Methods of going after vulnerable people associated with you are eventually ineffective. for one thing, odious people tend to be dumb, along with people who only act in mobs.

Take some Fat Tony wisdom— always do more than you talk about. Precede talk with action, for it will always remain that action without talk supersedes talk without action.

The IYI (intellectual yet idiot) is what Nietzsche called bildungsphilisters— or educated philistines; to beware of the slightly erudite who thinks he’s an erudite, as well as the barber who decides to perform brain surgery. The IYI also fails to naturally detect sophistry.

You can define a free person precisely as someone whose fate is not centrally dependent on peer assessment.

Antifragile — too high a rate of mutation prevents locking in the benefits of previous changes; evolution and progress requires some, but not too frequent, variation.

Bounded rationality: can not possibly measure and asses everything as if we are a computer. we therefore produce, under evolutionary pressures, some shortcuts and distortions. our knowledge of the world is fundamentally incomplete, so we need to avoid getting into unanticipated trouble— herb simon (father of artificial intelligence).

Indeed it doesn’t cost us much to refuse some new shoddy tech, not does it cost me much to go with my “refined paranoia”, even if wrong. For all it takes is for for my paranoia to be right once, and it saves my life.

Robustness is when you care more about the few who like your work than the multitude who hates it (artists); fragility is when you care more about the few who hate your work than the multitude who loves it (politicians) choose to be robust.