You Can't Have Too Much Skin in the Game

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If all your money is in a fund, that up nichols trage isn't going to be your natural incentive. And you won't really care about perception - you care about your own money. You can have too much skin in the game by forcing people to lose a little bit of money. Capitalism has a belton symmetry says that bankruptcy is isit is zero in it. There's no negative for company and bet; but there must be some equilibriuma. I think we are reaching that equilibrium in economic life. We're not worried about hyperinflation affecting modern-day savers or ctizen citizens,. But i'm worried about bureaucrats causing savers andn

Nassim Taleb of NYU-Poly talks with EconTalk host Russ Roberts about his recent paper (with Constantine Sandis) on the morality and effectiveness of "skin in the game." When decision makers have skin in the game--when they share in the costs and benefits of their decisions that might affect others--they are more likely to make prudent decisions than in cases where decision-makers can impose costs on others. Taleb sees skin in the game as not just a useful policy concept but a moral imperative. The conversation closes with some observations on the power of expected value for evaluating predictions along with Taleb's thoughts on economists who rarely have skin in the game when they make forecasts or take policy positions.