How to Pick Up the Nickels in a Fat Tailed Series

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If you look at fat tails, in a fat tailed series, eventually the maximum you will have will be equal to the mean to the totals. So what happens is, a cacho bones, one bonis two bons, three bones, nine. Your outcome is tha buldozer. Is not the nickels raly se te nickels yor relevant, t irrelevant. An oe. You don't observe.

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.