This book is volume four in the author’s Incerto series, following Fooled by Randomness, The Black Swan, and Antifragile. In it, he continues to explore the topics of uncertainty, risk, decision making under such circumstances, and how both individuals and societies winnow out what works from what doesn’t in order to choose wisely among the myriad alternatives available.
The title, “Skin in the Game”, is an aphorism which refers to an individual’s sharing the risks and rewards of an undertaking in which they are involved. This is often applied to business and finance, but it is, as the author demonstrates, a very general and powerful concept. An airline pilot has skin in the game along with the passengers. If the plane crashes and kills everybody on board, the pilot will die along with them. This insures that the pilot shares the passengers’ desire for a safe, uneventful trip and inspires confidence among them. A government “expert” putting together a “food pyramid” to be vigorously promoted among the citizenry and enforced upon captive populations such as school children or members of the armed forces, has no skin in the game. If his or her recommendations create an epidemic of obesity, type 2 diabetes, and cardiovascular disease, that probably won’t happen until after the “expert” has retired and, in any case, civil servants are not fired or demoted based upon the consequences of their recommendations.... [Read More]
This book is volume three in the author’s Incerto series, following Fooled by Randomness and The Black Swan. It continues to explore the themes of randomness, risk, and the design of systems: physical, economic, financial, and social, which perform well in the face of uncertainty and infrequent events with large consequences. He begins by posing the deceptively simple question, “What is the antonym of ‘fragile’?”
After thinking for a few moments, most people will answer with “robust” or one of its synonyms such as “sturdy”, “tough”, or “rugged”. But think about it a bit more: does a robust object or system actually behave in the opposite way to a fragile one? Consider a teacup made of fine china. It is fragile—if subjected to more than a very limited amount of force or acceleration, it will smash into bits. It is fragile because application of such an external stimulus, for example by dropping it on the floor, will dramatically degrade its value for the purposes for which it was created (you can’t drink tea from a handful of sherds, and they don’t look good sitting on the shelf). Now consider a teacup made of stainless steel. It is far more robust: you can drop it from ten kilometres onto a concrete slab and, while it may be slightly dented, it will still work fine and look OK, maybe even acquiring a little character from the adventure. But is this really the opposite of fragility? The china teacup was degraded by the impact, while the stainless steel one was not. But are there objects and systems which improve as a result of random events: uncertainty, risk, stressors, volatility, adventure, and the slings and arrows of existence in the real world? Such a system would not be robust, but would be genuinely “anti-fragile” (which I will subsequently write without the hyphen, as does the author): it welcomes these perturbations, and may even require them in order to function well or at all.... [Read More]