Why Is It Important to Talk About Binary?

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Without skinn at the game, is that if you say, welli if you lose money, i'm going to slap you on the wrist. That's not a very good system, because it doesn't know tats tot exactly. When he has skin a game, you hear much more, in a way, scientific, about things. You're much more rigorous athat risk. And there's a class of people who er, are trying to,. er promote the idea that people, that noll popabilities, are overpriced by the system.

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.