American essayist, scholar and former trader Nassim Nicholas Taleb, whose work focuses on problems of randomness, probability, and uncertainty, discusses his latest book “Skin in the Game”.
Nassim explores the notion that ‘skin in the game’ is necessary for fairness, commercial efficiency, and risk management, and key to making sense of the world at large.
Get the book here: https://amzn.to/2Tg0Fy1
What is Skin in the Game? The phrase is often mistaken for one-sided incentives: the promise of a bonus will make someone work harder for you. For the central attribute is symmetry: the balancing of incentives and disincentives, people should also penalized if something for which they are responsible goes wrong and hurts others: he or she who wants a share of the benefits needs to also share some of the risks.
[One of the more technical (and optional) chapters, at the end of Skin of the Game]
Rory Sutherland claims that the real function for swimming pools is allowing the middle class to sit around in bathing suits without looking ridiculous. Same with New York restaurants: you think their mission is to feed people, but that’s not what they do. They are in the business of selling you overpriced liquor or Great Tuscan wines by the glass, yet get you into the door by serving you your low-carb (or low-something) dishes at breakeven cost. (This business model, of course, fails to work in Saudi Arabia).