10 Takeaways for Thinkers from Skin in the Game Book

Hidden Asymmetries in Daily Life

I just finished reading Skin in the Game. I wanted to share some notes that spoke to me and might speak to you as well.

If you haven’t heard of Nassim Taleb, he is a genuine philosopher. Taleb has a unique skill to change the way we view the world through the strength and originality of his ideas. His other books include Fooled by RandomnessThe Black SwanAntifragile.

In going through Skin in the Game, I pulled out takeaways across all the chapters that I will re-read periodically. I give those to you now and highly recommend that you get the book. But if you’ve only 5 minutes, read this instead.

The Dominance of the Stubborn Minority — A Minority Rule.

A great example to understand this concept is Taleb’s example of kosher/halal eaters.

The kosher population represent < 0.3% residents in US. Yet, it appears almost all drinks are kosher. Why? The answer is simple. A kosher or halal eater will not eat non-halal or non-kosher food, but a non-halal or non-kosher person isn’t banned from eating kosher. Of course, this would be not true if the cost of manufacturing kosher food is 10x more than that of non-kosher.

Similarly, a disabled person will not use a regular bathroom, but a non-disabled person will use a disabled-person bathroom.

This is why airlines started serving pretzels compared to peanuts, even though there aren’t that many peanut allergic people on the flight.

The spread of automatic shifting cars is not due to the preferences of the majority. But it could be just that those who can drive manual shift can also drive automatic, but the reverse is not true.

Beer and wine asymmetry — When you have 10 percent or more female participants you can’t only serve beer. But most men will drink wine. So you need one set of glasses if you only serve wine.

How certain movies or books get banned? Certainly not because they offend the average person. Most people are passive and don’t really care or don’t care enough to request the banning. From past events, all it takes is a few motivated activists for the banning of a book or person.

Thus, the society doesn’t evolve by consensus, voting, committees, majority, conferences or polling; only a few people suffice to disproportionally move the needle. All one need is an asymmetric rule somewhere, and someone with skin in the game.

Other Takeaways

  1. Don’t take advice from people who don’t have skin in the game, i.e., be aware of the person who gives advice, telling you that a particular action is good for you and while it’s also good for him or her. While the harm directly affects you and not him.
  2. You will never fully convince someone that they are wrong; only reality can. To be precise, reality doesn’t care about winning arguments; survival is what matters.
  3. People don’t learn so much from their or others mistakes, but rather it’s the system that learns by selecting those less prone to a certain class of errors and eliminating others. For example, transportation didn’t get safer just because people learned from errors but because the system did. The experience of a system is different from that of an individual — It is grounded in filtering.
  4. Focusing on just words put us at a dangerous path since we are much better at doing than understanding. Doers win by doing and not by convincing. You don’t want to win an argument; you want to win whatever you’re after money, goals, convertible car.
  5. People hate uncertainty over mediocrity. For instance, you know what kind of food you will get at McDonald’s at a transit station compared to that Italian place that you have never heard of.
  6. Those who want to be out don’t want to stay in e.g. when someone wants to sell; they can’t be talked out of it. The market is like a large movie theatre with a small door. The best way to detect a sucker is to see if his focus is on the size of the theatre rather than of the door. The stampede happens in cinemas, say someone shouts fire because those who want to be out don’t want to stay in.
  7. Loss aversion: What matters isn’t what the person has or what he or she doesn’t have. What matters is what he is she is afraid of losing. More you have to lose, more fragile you are.

Treat your subordinates the same way you will like to be treated by your superiors.

Nassim Taleb

If you liked reading the excerpts and takeaways, I highly recommend getting the book.

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