
Skin in the Game – chapter drafts by Nassim Taleb - xvirk
http://fooledbyrandomness.com/SITG.html
======
mayukh
For somebody who wrote 'Fooled by ..' one of my favorite books of all time, he
certainly doesn't seem to suffer from self-doubt when it comes to stating his
personal hypotheses. I can look past his condescending tone (especially
towards the wealthy and 'pseudo' intellectuals), but his certitude in his own
ideas -- especially after pressing home the point that we are surrounded by
randomness -- tarnishes his punditry in my view.

~~~
tptacek
I read Fooled and Black Swan and I'm just going to admit it: I don't get it. I
mean, I think I understood both books. But can someone explain why they're
supposed to be so revelatory? I found them to be... something else.

Many, many smart people seem to swear by Fooled. Why? What am I missing?

~~~
VodkaHaze
Fooled by randomness is his best book, but it's probably getting replaced by
Robert Frank's book "Success and Luck" on my recommendation list for that
topic.

It's just a good reminder that you might be luckier than you think and that
skill doesn't fully explain the successful achievements.

Black Swan is seriously hard to read through; his arrogance is insufferable.
The point he's making is fairly self evident; the book just got published at a
very appropriate time.

You can get by without reading, or thinking about, his writings. He doesn't
deserve the level of fame he has achieved by all standards.

~~~
scott_s
I also found his arrogance in Black Swan insufferable - enough that I lost all
taste for his writing. I saw him talk in person in my building when he was
promoting Anti-Fragile, and I was also not impressed. Do you still recommend I
read Fooled By Randomness?

~~~
wglb
I would.

Do you think highly of Mandebrot? Clearly a deep thinker. Most of his writings
are filled with his self references.

~~~
scott_s
My own academic papers have a decent number of self references, too. But there
is an enormous difference between referencing your own work, and telling the
reader that the author is brilliant and those other people over there are
stupid.

~~~
wglb
Ok, so what your call be about Benoit pointing out how smart he is making me
feel non-brilliant?

~~~
scott_s
I am honestly not sure what you are saying. I never brought up Mandelbrot,
only Taleb. (Although this is a curious example, since Taleb brings up
Mandelbrot a lot.)

~~~
wglb
My clumsy attempt was to draw a parallel between to authors who do a
comparable amount of self congratulation.

------
Houshalter
The chapter about minorities ruling majorities was really insightful. He
mentioned how if even a small percent of people become anti GMO, then GMOs
will die out. A scary thing to keep in mind with the whole "label it" debate
that was on here a few days ago.

~~~
ikeboy
That only works if GMOs don't have a significant advantage over non GMOs. And
if they don't (in terms of price, properties, etc) then there's really not
much point to them, no reason to get excited.

~~~
Houshalter
They don't have a significant advantage. The price of non GMO food is only
slightly higher. Most of the cost of food is from processing and
transportation, not at the agricultural level.

But to the farmer, GMO yields are significantly higher, and can be the
difference between making a profit or a loss. It also means less use of
pesticides, and safer pesticides, among other possible advantages like disease
resistance. On a world scale, we produce more food with less land, which is
definitely good. And especially important for the third world.

The future of GMOs also has a lot of potential. We could engineer plants with
many times greater photosynthesis, or the ability to grow in salted land, to
not be damaged by frost, etc.

~~~
ikeboy
If all the factors you mentioned don't lead to a big price difference, then
that's the market telling us that they don't really matter. If production is
cheap, then there's a lot of supply, and there's little to be gained by
optimizing supply.

I stand by what I said. You cannot simultaneously have GMOs that are a
significant improvement overall without them negating the "minority" argument,
and ones small enough to be undermined by a vocal minority shouldn't matter.

"many times greater photosynthesis, or the ability to grow in salted land, to
not be damaged by frost"

If any of those were a real problem, then production would be a greater
percent of the final cost. If changing those doesn't really change the final
product price, then they're not important.

~~~
Houshalter
Just because something is only a small portion of the final product, doesn't
mean it's negligible overall. If say it raises the price of food by 10%,
that's 200 billion dollars lost in just the US. Probably the price increase is
smaller than that, but it would still be a non trivial amount of lost value.

And again, the real issue is with third world countries, where the price of
food can mean life or death. These countries depend on the first world to
innovate in things like GMOs. If we stop doing that, because people won't buy
them, we hurt the world's poor disproportionately.

~~~
ikeboy
10% of the price is enough to prevent a vocal minority from blocking it, I
think.

------
jkldotio
Here are two Facebook posts from Taleb related to the topic and a ~3 minute
video that has the main point.

"The _establishment_ composed of journos, BS-Vending talking heads with well-
formulated verbs, bureaucrato-cronies, lobbyists-in training, New Yorker-
reading semi-intellectuals, image-conscious empty suits, Washington rent-
seekers and other "well thinking" members of the vocal elites are not getting
the point about what is happening and the sterility of their arguments. People
are not voting for Trump (or Sanders). People are just voting, finally, to
destroy the establishment." \- 7th March -
[https://www.facebook.com/nntaleb/posts/10153654273663375](https://www.facebook.com/nntaleb/posts/10153654273663375)

"What we are seeing worldwide, from India to the UK to the US, is the
rebellion against the inner circle of no-skin-in-the-game policymaking
"clerks" and journalists-insiders, that class of paternalistic semi-
intellectual experts with some Ivy league, Oxford-Cambridge, or similar label-
driven education who are telling the rest of us 1) what to do, 2) what to eat,
3) how to speak, 4) how to think... and 5) who to vote for. With psychology
papers replicating less than 40%, dietary advice reversing after 30y of
fatphobia, macroeconomic analysis working worse than astrology, microeconomic
papers wrong 40% of the time, the appointment of Bernanke who was less than
clueless of the risks, and pharmaceutical trials replicating only 1/5th of the
time, people are perfectly entitled to rely on their own ancestral instinct
and listen to their grandmothers with a better track record than these
policymaking goons. Indeed one can see that these academico-bureaucrats
wanting to run our lives aren't even rigorous, whether in medical statistics
or policymaking. I have shown that most of what Cass-Sunstein-Richard Thaler
types call "rational" or "irrational" comes from misunderstanding of
probability theory." \- 9th March -
[https://www.facebook.com/nntaleb/posts/10153658794008375](https://www.facebook.com/nntaleb/posts/10153658794008375)

"Nassim Taleb: Skin in the Game" \- 2m48s - 22nd April -
[https://www.youtube.com/watch?v=0Uc4DI-
BF28](https://www.youtube.com/watch?v=0Uc4DI-BF28)

~~~
VodkaHaze
Seems like he's gone full ZeroHedge

~~~
ricksplat
Except this guy is a _known_ and reputable expert in economics. He's worth
listening to unless you fear he may be shorting his readership (joking).

~~~
VodkaHaze
Nitpicking: he's an asset allocation/market expert, not an economics expert.
His PhD is in finance, not economics. There's a significant difference.

~~~
ricksplat
Significant perhaps in the statistical sense. The domain is the same. I
believe he is also a professor of mathematics. He has some eminence in this
area in any case.

------
chad_strategic
I look forward to reading his book. His writing style is good but not great.

I'm surprised about a lot of accusation of arrogance,etc...

From what I have read his arrogance, might be misconceived as he is
willingness to call out anybody on what he perceived as their BS. We need more
people to call others out on their BS. (US elections, MSM, cnbc, Mosanto, wall
street...)

Anybody that open comes out and says Saudi Arabia is a barbaric / terrorist
state, (which the US Gov, seems to over look for years) questions the Federal
Reserve, teaches at community college. Constantly, open sources his books and
math. Probably isn't part of the establishment and hence might be driving
peoples dislike.

Of course most people on Wall St. don't like him because they don't understand
his theories or his thoughts.

He has great twitter feed. (He retweeted me once!)

~~~
antisthenes
The accusation of arrogance is especially ironic coming from the HN crowd, who
assume themselves being especially qualified to comment on fields they are not
experts on (statistics and economics in particular, but many others as well)

~~~
chad_strategic
Thank you for putting in words, what I have always thought, but never put in
actual words or was validated by anybody else.

------
xfax
Am I the only one who doesn't enjoy Taleb's writing style? I find that he
tends to use overly complex vocabulary to explain very simple ideas.

~~~
s_kilk
When I tried to read Antifragile his style seemed rambling and incoherent,
darting back and forth between concepts and obtuse metaphors, like a tirade
from the coked-up conspiracy nut at every party.

I may need to give it another shot.

~~~
Torgo
I don't know how to describe it, but his style is...vintage. More like when I
read old books. I'm particularly suited for this writing style and I interpret
it fine. People frequently make the same complaints about the way I speak in
person when discussing things. This is in no way a claim that I am as smart as
Taleb.

------
pitt1980
[http://fooledbyrandomness.com/minority.pdf](http://fooledbyrandomness.com/minority.pdf)

this chapter interesting contrasts with this blog post

[http://slatestarcodex.com/2015/12/01/setting-the-
default/](http://slatestarcodex.com/2015/12/01/setting-the-default/)

\-------------

a better writer than me could shortly synthesis what's interesting about the
two

the blog post is sort of a defense of cultural warriorism

the chapter seems to expand on it

------
JulianRaphael
I look forward to reading this book. It would be interesting to have an
investigation of the two different kinds of "skin in the game" in this book.

There is a positive spin of the expression, e.g. the entrepreneur, who has
skin in the game of his company via his shares and resources. This scenario
(ideally) results in eustress.

However, there is also a negative spin of the expression, e.g. an employee,
who has skin in the game by being afraid of losing his job. Usually, this
leads to distress over the long term.

Hence, if I want to employ someone I face a dilemma: the employee should have
skin in the game, but it shouldn't create distress. There's a huge set of
options you can go with as the employer, but I wonder if there is an optimal
solution.

~~~
deepnet
Misalignment of incentives with desired outcomes is often overlooked as a
cause of social ills. In general people do what gets them pay and promotion.

Bonuses and shares align owners and employees interests.

In Shaw's introduction to _Pygmalion_ he points out we pay our doctors when we
are ill; contrasting this to paying only when well, which Shaw suggests more
clearly aligns preventative medicine with doctor's pay.

Or the classic budget underspend resulting in less funding next year,
incentivising innefficiency.

'Juking the Stats' is the epitomy. A useful metric, like pupils passing tests
when used to allocate budgets becomes the sole object of teaching. Rather than
education, the school teaches the test and worse those who are educators are
ground down - as Simon's _Pryzbylewski_ finds in _The Wire_.

~~~
JulianRaphael
I agree, although bonuses and shares can also backfire (esp. bonuses). There
seems to be a mix of extrinsic and intrinsic factors that work well. Do you
think there is an optimal solution to make an employee have skin in the game,
but in a positive way?

------
sremani
I thoroughly enjoyed his other book, "Anti-Fragile" and even more enjoy his
twitter feed. He may be low on humility factor, but him calling out BS is
refreshing, esp. the self-proclaimed vanguards of science whose work in
science is filled with holes and/or is sparse.

Read some of the preview chapters, posted here and twitter feed. Fits very
well with his writing style and over all theme. I look forward to read this
book.

~~~
VodkaHaze
For someone calling out vanguards of science, he's light on science himself.
He pulled all his "theories" out of his ass, with no empirical support or
mathematical deduction.

Fooled by randomness was nice and all, and Black Swan was OK (if you can read
past his arrogance), but now he considers himself a "public intellectual", and
treats himself as the class of a Nobel winner when he has no more credentials
than any other random day trader

~~~
anton1989
Probability theory is the queen of science

------
EGreg
The solution to the employee slavery problem is simple: try a part time stint
in an industry you can afford to mess up in.

For example, if you can get a job as a non-proprietary trader you get a huge
positive expected value. You make $$ - you get a huge windfall. Mess up? You
get fired and collect only a small salary. You should make a pact with a
couple friends to share he windfalls, and then each of you makes a guaranteed
win.

~~~
cylinder
That's interesting. Four different trading philosophies, four traders. They're
aware of their fallibility. They contract and pour their earnings into an
escrow account every pay period. They each receive a basic stipend. At the
terminus of the agreement (e.g., 2 years), all earnings are distributed
evenly.

------
scott_s
From
[http://fooledbyrandomness.com/minority.pdf](http://fooledbyrandomness.com/minority.pdf):
"Which explains why it is so hard to find peanuts on airplanes"

I was _just_ on a flight where peanuts was one of the snack options. (I chose
pretzels.)

------
rodionos
Couldn't finish Black Swan, the same idea, regardless its merits, is discussed
on 300 pages over and over again. Highly repetitive, the tone is generally
condescending. I didn't like his stories about giving taxi drivers 100 dollar
bills and observing their behavior.

------
paulpauper
Taleb has made a career out of distorting and misconstruing the opinions of
experts and professionals, whether it's about statistics, option trading, or
risk management. He has few is only unique insights. His trading strategies
that he allegedly used to make a fortune no longer work.

------
miseg
You can see that he enjoys his writing, and I will enjoy reading this book.

