skin in the game book pdf

Skin in the game book pdf

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Video Book Notes

Skin in the Game Summary and Review

Skin in the Game by Nassim Nicholas Taleb

skin game pdf

Still worth a read, though.

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Video Book Notes

Pick up the key ideas in the book with this quick summary. In every human interaction, there are certain factors bubbling under the surface and influencing the outcome. The first is the symmetry, or balance, of the interaction. If we want to understand this, we must ask some key questions: Which person knows more? Does, say, the buyer know more than the seller when you make a transaction? Is one person using their greater knowledge to manipulate the other?

The second factor is risk. In many situations in our daily lives, whether a visit to the doctor or an interaction with a salesperson, we rarely stop and ask ourselves about the risk. That is: How much does the advisor have to lose? What will happen to us if things go wrong?

In other words, how much skin in the game they have. Are you familiar with the ancient Roman myth about a group of fishermen who caught and cooked some turtles? The turtles turned out to be inedible, and the group was discussing how to dispose of them when the god Mercury passed by. Seeing an opportunity to offload their disastrous dish, they invited him to eat with them. However, Mercury was wise to their tricks and forced them to eat the turtles instead.

Although they might not be dealing with turtles and Roman gods, modern-day salespeople could learn a lot from this story. Well, this myth establishes an important lesson that the fisherman learned the hard way: it's immoral to disguise a sales pitch as well-intentioned advice. For instance, when the author worked for an investment bank, he frequently saw the underhand tactics that traders used to sell their excess or unwanted stocks to clients.

Instead of being honest about why they wanted to sell the stocks — that is, they had a surplus — the traders told clients the stocks would be great for their particular portfolios, that their value would almost definitely increase, and that they would sorely regret missing such an opportunity. In other words, the traders held back important information about their true reasons for selling and made their desperate sales pitch and psychological manipulation seem like good advice.

But is there really something wrong with this? This term refers to an asymmetry of information between two agents. If one agent, the seller, has much more information about the transaction than the other agent, the buyer, then the seller could be said to have too much certainty about the outcome of the transaction, and the buyer too little.

In this case, Gharar would exist in the transaction, and thus it might be forbidden from taking place until the information asymmetry was redressed, and the buyer was given more information. If you studied the behavior of an individual ant, could you understand how a whole colony of ants operate?

Surprisingly, these interpersonal interactions often follow simple rules that have bizarre consequences. Minority rule is one of the most interesting examples of these rules. Minority rule refers to the fact that it only takes the existence of a tiny, yet inflexible, minority — as little as 3 percent of the total population — before the whole population must go along with their preferences. If this sounds absurd, then consider the following example from the United Kingdom.

Muslims in the United Kingdom make up only around 4 percent of the total population, yet 70 percent of the lamb imported from New Zealand a major UK supplier adheres to Islamic slaughter guidelines and is halal. In other words, the majority of the United Kingdom is eating halal lamb, but only 4 percent has a preference for doing so. Why does this phenomenon happen? Because, in situations like the above, the majority is more flexible than the minority.

Therefore, it makes financial sense for UK retailers to predominantly offer halal meat to all consumers, so as not to lose any market share. Although you might think this logic seems obvious, companies seeking to change consumer behavior often make the mistake of ignoring the concept of minority rule. In effect, the millions spent by the agricultural businesses to persuade the majority have been useless — the inflexible minority still rules. In the fifth century, there was a group of monks who belonged to no particular monastic order.

These monks, called Gyrovagues, roamed around Europe, begging for food and shelter from townspeople. In fact, there was nothing the Church could exchange for their obedience — the monks were happy being penniless.

So the Church worked tirelessly to introduce rules for all monks in order to curb their freedom. Controlling them ensures the company can depend on them. For example, if forced into a rigid 9 a. By hiring employees, organizations buy themselves peace of mind.

But what about the employee? Well, the uncomfortable truth is that many of us have been psychologically conditioned to obedience. Conditioned employees are individuals whose personal identities are intrinsically tied to the companies for which they work. They dress as their company expects them to and even use the language of their organization, speaking in company jargon. These workers have been conditioned to have skin in the game, that is, they themselves have something to risk.

For example, all IBM employees must wear white shirts and blue suits and are encouraged to socialize outside of work with one another. IBM employees want to remain obedient — if they get fired, they lose their wardrobe, their social life, and no one would get their jokes.

According to the author, there are two kinds of income inequality in society. The first applies to individuals such as rich celebrity chefs, entrepreneurs and famous singers. The second applies to wealthy bankers, chief executives and bureaucrats. Both of these groups have more money than the rest of us, but as it turns out, we only resent one of these groups for the discrepancy. When it comes to famous chefs, singers and entrepreneurs, we tend to accept their disproportionately high levels of wealth, but when faced with outrageously rich bankers and chief executives, society has a problem with their fortunes.

For instance, Joan C. Williams, an author, explains that working-class Americans typically view entrepreneurs and celebrities as role models. Conversely, Michele Lamont, the author of The Dignity of Working Men , interviewed blue-collar Americans and found that they resented highly-paid professionals, such as chief executives and bureaucrats.

And it's not just Americans who dislike highly-paid professionals. In contrast, Swiss society typically regards wealthy entrepreneurs with respect.

It all comes down to having skin in the game. In other words, society accepts that big risk should lead to big reward, but it dislikes when small risks seem to reap the same prizes. Working-class voters viewed his wealth as evidence of his entrepreneurial success and saw his bankruptcies as proof he had real skin in the game, risking everything to achieve his lavish lifestyle. Imagine you need to choose one of two surgeons to perform surgery on you.

The first surgeon looks exactly as you might expect a surgeon to look. He has a slim build, delicate hands and is highly articulate.

The second surgeon is very different. He is badly dressed, overweight and looks more like a butcher than a doctor. Surprisingly, the author would choose the second one. In other words, he has probably had to jump over more hurdles to prove himself than the surgeon who looks more like a surgeon.

In this context, jumping over hurdles equates to being competent at actual surgery. We can infer this because the medical profession is one in which people have a lot of skin in the game, in that everyone involved is incurring risk: the patient, whose health is on the line, and the surgeon, who risks a lawsuit if he bungles an operation. In this profession, outcomes are based on looking at reality, and competence wins out over image.

Perhaps it should, but in professions in which people have less skin in the game, the reverse is typically true. CEOs and the people who recruit them have far less skin in the game than doctors and the people who recruit them; their patients.

Instead, they evaluate their image. Have you ever eaten at an exorbitantly expensive but disappointing restaurant? The author once went to dinner with a wealthy friend. Though he would have preferred a simple neighborhood joint, his friend could afford something much more expensive, so they visited a Michelin-starred establishment where the food was over-complicated and the portions minuscule.

The reason? The rich are surprisingly easy to scam. Although you might assume rich people enjoy the best of everything, it's not always the case. In fact, when people become wealthy, they also become more likely to purchase overdone and disappointing products and experiences, such as the aforementioned meal. For instance, most of us would think carefully before we spent a large amount of money on something.

We would care about whether the product or experience was worth the expenditure, or we would risk wasting our limited resources. In other words, they start to think less about what they want.

This means their choices start being dictated by salespeople who want to part them from their cash. These salespeople have a lot more to gain from selling overpriced products than the rich have to lose by buying them. For instance, when many people become rich, they move into big mansions set in large, secluded grounds. However, the author is convinced that most only do so because they are pressured by real-estate agents and marketing that advises them how to live.

In reality, most people are far happier living in lively neighborhoods with plenty of company and fellow human warmth than in silent, vast mansions. Look deeply into any facet of our financial or social lives and you begin to see that asymmetries in information, risk and preference determine much of our behavior and outcomes.

Therefore, in any given situation, we should examine the knowledge that each stakeholder has, and who has the most to lose if we want to truly understand why people behave as they do. Skin in the Game Key Idea 1: Any asymmetry of information between buyer and seller is morally wrong. For instance, Sharia law, the Islamic legal code, contains the concept of Gharar.

Skin in the Game Key Idea 2: Many people fail to understand that the minority rules the majority. Skin in the Game Key Idea 3: Companies condition their employees to accept a loss of freedom. Modern-day companies also seek to curb the freedom of those who work for them.

They employ them.

Skin in the Game Summary and Review

Search this site. As always both accessible and iconoclastic, Taleb challenges long-held beliefs about the values of those who spearhead military interventions, make financial investments, and propagate religious faiths. You cannot make profits and transfer the risks to others, as bankers and large corporations do. You cannot get rich without owning your own risk and paying for your own losses. Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations.

Taleb's thesis is that skin in the game —i. If an actor pockets some rewards from a policy they enact or support without accepting any of the risks, economists consider it to be a problem of "missing incentives". In contrast, to Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, the other is stuck with the risks. Taleb argues that "For social justice, focus on symmetry and risk sharing. You cannot make profits and transfer the risks to others, as bankers and large corporations do Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations. Actors - per Taleb - must bear a cost when they fail the public.

Pick up the key ideas in the book with this quick summary. In every human interaction, there are certain factors bubbling under the surface and influencing the outcome. The first is the symmetry, or balance, of the interaction. If we want to understand this, we must ask some key questions: Which person knows more? Does, say, the buyer know more than the seller when you make a transaction?

Skin in the Game by Nassim Nicholas Taleb

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[DOWNLOAD -PDF-] Skin in the Game: Hidden Asymmetries in Daily Life Full PDF Online

Bolivarian Republic of Venezuela , [1] is a complex case.

skin game pdf

From the bestselling author of The Black Swan, a bold book that challenges many of our long-held beliefs about risk and reward, politics and. Policy wonks, corporate executives, many academics, bankers and most journalists don't. It's all about having something to. In his most provocative and practical book yet, Nassim Nicholas Taleb shows that skin in the game, often. In his inimitable style, Taleb draws on everything from.

Он стоял у края тротуара, пропуская машины. Наверное, она подумает бог знает что: он всегда звонил ей, если обещал. Беккер зашагал по улице с четырехполосным движением и бульваром посередине. Туда и обратно, - мысленно повторял .


Он избранник богов. - В моих руках копия ключа Цифровой крепости, - послышался голос с американским акцентом.  - Не желаете купить. Нуматака чуть не расхохотался во весь голос. Он знал, что это трюк. Корпорация Нуматек сделала очень крупную ставку на новый алгоритм Танкадо, и теперь кто-то из конкурентов пытается выведать ее величину.

Джабба захохотал. - Сидит тридцать шесть часов подряд. Бедняга. Наверное, жена сказала ему не возвращаться домой. Я слышал, она его уже достала. Мидж задумалась. До нее тоже доходили подобные слухи.


  • Chris M. 08.06.2021 at 04:16

    Learn more.

  • Zebedeo N. 09.06.2021 at 19:08

    Appendix to Book 3: A Few More Counterintuitive Things About the Collective BOOK 7: RELIGION, BELIEF, AND SKIN IN THE GAME. Chapter They Don't; Cirillo.


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