Taleb's New Skin In The Game Paper

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Ego
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Taleb's New Skin In The Game Paper

Post by Ego »

https://dl.dropboxusercontent.com/u/50282823/skin.pdf
-The study of ignorance, then, is of supreme importance in our individual and social lives, from health and safety measures to politics and gambling. But how are we to act in the face of all the uncertainty that remains after we have become aware of our ignorance?

-...one should be the first consumer of one’s product, a cook should test his own food, helicopter repair persons should be ready to take random flights on the rotorcraft that they maintain, hedge fund managers should be maximally invested in their funds.

-A heuristic, unlike a regulation, does not require state intervention for implementation. It is simple contract between willing individuals:
"I buy your goods if you use them", or "I listen to your forecast if you are exposed to losses if you are wrong"

secretwealth
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Re: Taleb's New Skin In The Game Paper

Post by secretwealth »

Ramble like a mad man on the internet: people laugh at you.

Make a few billion, then ramble like a mad man on the internet: people worship you.

Money is power.

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Ego
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Re: Taleb's New Skin In The Game Paper

Post by Ego »

Granted, he does come across as a rambling mad man. His way of saying things can be grating. But some of his ideas seem credible, at least to me. This one in particular seems like a good one. If you want to manage a fund you've got to be invested in the fund. If you take great risks with the money entrusted to you by others then you should also be willing to accept the same risk with your own money. What would happen if investors demanded this?

secretwealth
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Re: Taleb's New Skin In The Game Paper

Post by secretwealth »

Yeah, I fully agree--a lot of his ideas seem credible, because they're not new or earth-shattering. So skin in the game tends to improve performance--gee, who didn't know that? Also, systems that are built to resist failure are better than systems that don't--wowee, thanks Nassim.

Sorry, don't mean to sound glib.

Triangle
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Re: Taleb's New Skin In The Game Paper

Post by Triangle »

I agree that Taleb is more of a pop-science aggregator than anything else, like Gladwell but more rambling and less structured. If you're already interested in the topic, you're not going to learn anything new. If you're not, you're not going to get much more than a skimming of the new topic.

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jennypenny
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Re: Taleb's New Skin In The Game Paper

Post by jennypenny »

That was good.

I used to dislike Taleb because of his rambling nature. I like him more now. It's easier to read his work now that I've seen him speak several times and I can 'hear' him in my head when I read. I also think he just has a lot to say, and trips over himself trying to get it all out. He's excited about his work. It's infectious.

RealPerson
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Re: Taleb's New Skin In The Game Paper

Post by RealPerson »

secretwealth wrote:Yeah, I fully agree--a lot of his ideas seem credible, because they're not new or earth-shattering. So skin in the game tends to improve performance--gee, who didn't know that? Also, systems that are built to resist failure are better than systems that don't--wowee, thanks Nassim.
This message, although not earth shattering, bears repeating. If mortgage brokers had been personally responsible for the mortgages they helped approve, the 2008 crash probably would not have happened. The absence of skin in the game is the root cause of so much going wrong. The concept is known, but applying it would be immensely helpful and beneficial to society. "Too big to fail" is the opposite of skin in the game. The government guarantees for Freddie and Fannie are beautiful examples of skin being taken out of the game. Unless "skin in the game" refers to taxpayers' skin. That kind of skin is increasingly in the game. :(

Chad
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Re: Taleb's New Skin In The Game Paper

Post by Chad »

His ideas are credible, but not new or earth shattering in anyway. I'm about a 1/4 of the way through Anti-Fragile and I'm rather disappointed. All he really did was rename risk. I get it that he is trying to focus on one particular aspect of risk and how it can help us, but he tries to make it sound like no one ever takes this into account. Or, that he is the first one to ever identify it. Please.

Then he complains that all other economists are trying to make predictions, but that you can't because what they are using can't be measured. He then immediately turns around and makes his own equations which contain numbers you have to invent/estimate and are not measured.

His idea of "skin in the game" is by no means his. Of course, then he immediately suggests the system should be simple and open. This is precisely why the mortgage brokers made bad loans, because they were allowed to sell them off in the current "open" system and not have skin in the game.

He is a bit of rambler. I think that comes from his giant ego not bothering to do what he actually quotes towards the beginning of Anti-Fragile. He quotes an old Middle Eastern saying about how a master is someone able to keep things simple. He just doesn't bother, which is odd when he quotes it.

His rambling sounds like one of my finance professors from college who constantly berated us from the first day of class about how he had all the answers, but we just didn't want to learn. It was the first day of class, how the fuck would he know. He never did try and teach us anything.

Plus, he just plain hates academics. I don't disagree there are serious issues with the academics, but his dislike of them is as much personal, as it is based on logic. Did a professor steal his wife from him? There is a lot of venom in his hate.

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Ego
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Re: Taleb's New Skin In The Game Paper

Post by Ego »

The gems in the book, IMO, involve the crossing of disciplines. It is easy to say that this or that is not a new idea when he is talking about, for instance, iatrogenics (harm done by the healer) or hormesis and Mithridatization.

Image

Spending the day under constant supervision of my physician while avoiding absolutely anything that could potentially do me harm is itself harmful. I'd become a human jellyfish. Not a new idea. If I were to do that same thing to my investments, to my business, to my culture, to my relationships, to my government, to my recreation, to my philosophy of life... this is where we get into the new ideas. Or, if not new then at least touching on things that we feel to be true but shy away from by following the "expert" opinion spouting the prudent, safe option.

For nearly twenty years now I've been saying that life (in the U.S.) feels a little too guaranteed, insured and sealed for my own protection. When I say it out loud some people look at me like I am absolutely crazy. Others agree so strongly they nod and interrupt with "yes, Yes, YES!" before I get to insured.

If I were to answer the "what do you want to do with your life" thread I suspect it would be something like... I want to provoke the hormetic dose response in every aspect of life that I can, and I want to do it as long as I can. If nothing else, the ideas expressed by Taleb are like those people nodding and interrupting with "yes, Yes, YES!" They prod me to avoid becoming a jellyfish.

To dismiss him for his bombastic nature, his devout religious beliefs or his Libertarianism would throw the baby out with the bathwater.

Chad
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Re: Taleb's New Skin In The Game Paper

Post by Chad »

Ego wrote:To dismiss him for his bombastic nature, his devout religious beliefs or his Libertarianism would throw the baby out with the bathwater.
It bothers me that he is already hypocritical (the "simple" quote in my previous post) and I'm not even halfway in the book. Him yelling at me from the page, or in this case through a voice actor, is not good way to make me receptive.

Concerning his strong religious and libertarian beliefs, both are negatives he has to overcome with me by using well defined logic.

It's fine that he is religious, but it is based on things we can't prove. This just makes me more suspect of his logic. Especially, when he continues to bring it up. Now, it will probably tail off during the rest of the book, so it may turn out to be a non-issue.

Concerning his libertarian views; I don't have an issue with the ideas. I have an issue when someone thinks they are the answer to everything. Just like if someone thinks socialism, conservatism, etc. answers everything. This is another hurdle he built that he has to overcome for me.

In reality, his strong beliefs are very non-anti-fragile, which is odd considering he is writing this book to propose ideas that take advantage of anti-fragility. But, again, I haven't finished it yet, so he may change my mind by the end.
Ego wrote:For nearly twenty years now I've been saying that life (in the U.S.) feels a little too guaranteed, insured and sealed for my own protection. When I say it out loud some people look at me like I am absolutely crazy. Others agree so strongly they nod and interrupt with "yes, Yes, YES!" before I get to insured.
I don't disagree with you on this. It's actually my top reason why there is actually a danger that the US declines. The people that immigrated here throughout history essentially self-selected as risk takers. Now that immigrants make up a much smaller part of our population and our population has been here long enough, we are starting to fall back into the normal human bell curve for risk. A bad thing for innovation and for moving a country forward.

If we were still risk takers, which requires sacrifice, our President wouldn't have asked us to go shopping to fight terrorism. We are obviously losing this to some extent.

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Ego
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Re: Taleb's New Skin In The Game Paper

Post by Ego »

Chad wrote:In reality, his strong beliefs are very non-anti-fragile, which is odd considering he is writing this book to propose ideas that take advantage of anti-fragility. But, again, I haven't finished it yet, so he may change my mind by the end.
Good point. I get the feeling he pushes them out there in such a forceful way so as to invite people to hit back hard. When they do he has to defend his ideas. It is in the defense that weaknesses are exposed.

I have to admit, the fact that he is so devoutly religious perplexes me. People are complex.

Chad
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Re: Taleb's New Skin In The Game Paper

Post by Chad »

Ego wrote: Good point. I get the feeling he pushes them out there in such a forceful way so as to invite people to hit back hard. When they do he has to defend his ideas. It is in the defense that weaknesses are exposed.

I have to admit, the fact that he is so devoutly religious perplexes me. People are complex.
He may be pushing his beliefs hard for the exercise provided by the arguments. It would be interesting to know if that's a conscious decision on his part.

Though, my initial thought was that he was one of those really smart people that just can't fathom that he could be wrong and just bashes his ideas over the heads of others. Obviously, that is more of a feeling on my part, as I don't know the man and have only read the Black Swan and a 1/4 of Anti-Fragile.

His strong religious beliefs are interesting given that he came from an area where strong religious beliefs over power reason on a regular basis. Plus, he was part of a religious minority within a strongly religious society, which seems like he would have seen a lot of prejudice and hate directed his way just for his beliefs by others of strong belief. Of course, that could also be why he hangs onto them so strongly.

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jennypenny
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Re: Taleb's New Skin In The Game Paper

Post by jennypenny »

I'm afraid to ask, but why do you guys find Taleb's faith perplexing?

Perhaps he's had an experience or two that provided him the proof he needed? Perhaps he shares the belief of some other intellectuals who feel it's all too perfect to be random?

Justifying faith is not the same as a mathematical proof. It's more akin to convincing someone to fall in love, or even that vanilla is better than chocolate. Faith is personal.

Triangle
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Re: Taleb's New Skin In The Game Paper

Post by Triangle »

Many people have big problems even accepting the idea that other people have (a different) faith.

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Ego
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Re: Taleb's New Skin In The Game Paper

Post by Ego »

jennypenny wrote:I'm afraid to ask, but why do you guys find Taleb's faith perplexing?

Perhaps he's had an experience or two that provided him the proof he needed? Perhaps he shares the belief of some other intellectuals who feel it's all too perfect to be random?

Justifying faith is not the same as a mathematical proof. It's more akin to convincing someone to fall in love, or even that vanilla is better than chocolate. Faith is personal.
For some of us who don't believe, professing belief is akin to saying that vanilla is right and chocolate is wrong. The next step (which is a very short step) is to collaborate (or at least acquiesce) to the wishes of the vanilla-gang hierarchy as they force feed vanilla on the chocolate eaters and ice cream abstainers.

Chad
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Re: Taleb's New Skin In The Game Paper

Post by Chad »

I concur with Ego and Bigato. Those brief explanations cover it well enough.

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jennypenny
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Re: Taleb's New Skin In The Game Paper

Post by jennypenny »

bigato wrote:But... Do you really want to go down this rabbit hole? :)
*sigh* No. Just remember we're not all like that. (what Ego described)

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Ego
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Re: Taleb's New Skin In The Game Paper

Post by Ego »

jennypenny wrote:*sigh* No. Just remember we're not all like that. (what Ego described)
That's precisely what makes it so perplexing. As far as I can see there are only two explanations for NOT being like that.

- The non-force-feeder doesn't care that the non-vanillas will spend eternity in hell.
- The non-force-feeder doesn't really believe it.

I don't want to chase you (or anyone else) into a corner demanding you explain this and that. I'm just surprised that Taleb hasn't gone there himself.

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jennypenny
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Re: Taleb's New Skin In The Game Paper

Post by jennypenny »

Ego wrote:The non-force-feeder doesn't care that the non-vanillas will spend eternity in hell.
I'm not going to speak for all religions but that's not technically what the Catholic Church teaches, and I'm pretty sure Greek Orthodox is the same in this. (I teach RCIA) Chocolate eaters can't say what will happen to vanilla eaters. None of us knows God's plan in this regard. We are taught never to say someone is going to hell. That said, I realize there are lots of thumpers out there who ignore church teachings and like to toss the fire and brimstone around.

I'm pretty confident a guy like Taleb knows the teachings inside and out if he's that devout. LOL...can you imagine being his pastor and the questions he would pepper you with constantly?!

------
I'm not sure I answered your question. Non-force-feeders might care a great deal about the vanilla eaters. They just choose to live in a way that (hopefully) shows their faith in a positive light, and pray that God has a plan for those they care about who are vanilla eaters.

Old translations of evangelize are closer to being a light or beacon, not actively converting and/or condemning. IMHO, Taleb is a wonderful example of this.

secretwealth
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Re: Taleb's New Skin In The Game Paper

Post by secretwealth »

I doubt Taleb would ask better questions than your average upper middle class IT professional. But, anyway, I think there's no reason to discuss his or anyone else's religious beliefs here--plenty of investors have deep beliefs, whether it's in a religion or nationality.

There's a new generation of pseudo-intellectuals who garner a great deal of popularity on the internet from a very specific demographic: Assange, Snowden, Taleb. It worries me because I think pseudo-intellectual rambling is more insidious and damaging than mindless drivel like the Kardashians or Paris Hilton, where it pretty much is what it says on the tin.

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