Nassim Taleb on skin in the game
Taleb holds that no one should keep the upside of a decision while transferring its downside to others, a symmetry he traces from Hammurabi's code to modern bankers and warmongers. From that he draws ethical rules (tell people what you do rather than what to do; firms that can be bailed out shouldn't pay bankers' bonuses) and a theory of knowledge: systems learn by eliminating those who bear their own risks and fail, so exposure to downside, not looking the part, marks real expertise and courage.
12 points · 7 appearances · 2013–2024
How the view evolved
Bankers keep upside, taxpayers fund downside → Warmongers pay no price; systems can't learn
In the 2013 ReasonTV interview, skin in the game is a fix for bankers who collect option-like bonuses while taxpayers cover the blowup. By the 2019 Google talk it is also a theory of knowledge: 'let's merge the ethics and epistemology', since systems learn only by eliminating those who don't bear their own risk.
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2008–2024 · changed view
“Problem of most theorists, problem for universities, is you go from theory to practice, the degrees of freedom from theories of practice are considerably narrow, small. The reverse is monstrous. So let me give you this for: if I leave in a small piece of ice cube on the floor, okay, you can easily get someone in second year physics students to write the equation to tell you what's going, hard to predict, how that ice cube will melt. Okay, it's a very simple thing, the second rate student could do it. All right, right, know someone from Boston that is can do it. Okay, so the, yeah, so you can predict. So, but now, conditional on seeing water on the floor, is it easy to reverse-engineer the ice cube? No. You have an infinity of ice cubes.”
2008–2024
“The whole idea of the Black Swan, everything I've been telling everyone, every person I meet, is to bet on disruption, on unforeseen, to not be harmed by silent risk. Okay, that's the idea. The first thing is don't be harmed by it.”
2013–2023 · changed view
“Please mishandle. So something that is fragile, if you map it properly mathematically, you'd realize that the fragile is what does not like disorder. It doesn't want mishandling, it doesn't want volatility, it wants peace and predictability. So the opposite of that would be something that love volatility.”
2008–2024 · changed view
“So there was an expression until we saw Australia, and effectively one, the sighting of a single bird destroyed millennia of confirmation. So it was a post as a logical problem, by showing that there's no reason, you cannot rule out a Black Swan because you haven't seen any. Okay, my problem is not a logical question. My Black Swan is an event, it's not a bird. So, and it's an event that has three properties.”