Skin In The Game

You got skin in the game? You should, if you aren’t a coward. Skin in the game builds trust. And trust matters.

Nassim Taleb’s book Skin in the Game: Hidden Asymmetries in Daily Life explores the concept that decision-makers must bear the consequences of their decisions. Taleb argues that having "skin in the game" — a personal stake in the outcome — is essential for ethical behavior and systems that are robust. Without it, decision-makers can externalize risks onto others, creating fragile and unjust systems. Taleb applies this principle across various fields, from finance and politics to religion and ethics.

Of course, here at the Society of Problem Solvers, we like to point out that this is exactly what corruption does to a system - creates asymmetrical risk. The people corrupting the system get to take a risk with everyone else’s money, health, education, and beyond, without having to risk anything themselves.

A perfect example of this, Taleb argues, is government bailouts - where financial executives benefit from risky decisions while taxpayers bear the losses. Taleb emphasizes that people who take risks with their own capital, own reputation, or own safety are more likely to make prudent and sustainable choices. This principle underpins advancing societies, where personal accountability discourages recklessness and exploitation.

Taleb also delves into the importance of decentralization and local decision-making, arguing that systems with distributed power are more resilient. He criticizes top-down governance and large bureaucracies for disconnecting decision-makers from the real-world consequences of their actions. This can be true of bailouts, wars, Wall Street, public policy decisions, or beyond.

SKIN IN THE GAME AS A REMEDY FOR TRUST

Recently, we have been playing with the idea of running a business using collective “swarm” intelligence systems to make financial decisions as a group of investors. We wrote about using collective intelligence for business previously HERE, but this new approach would take it to a whole new level. We will dive into this more deeply in a future article, but below is the basics of it.

Recently, we put a post up saying:

“If 1000 people decided to start a 100% transparent company together and all threw $25 a month in the middle, that entity could easily become a force for change with a starting cash flow of $25,000.00 a month.

If the owners used collective “swarm” intelligence systems to decide what to do with that money, we could create a new kind of decentralized business model. A swarm owned business.”

The response we got was impressive. A lot of people seemed into the idea. The problem is, that if you actually tried to do this you would run into the SEC securities’ rules, most likely. Unless you could find a loophole.

So we also floated the idea of making “A Game of Business” but with less monthly fees - say $5 a player - where that $5 all went into the middle and we decided as a group what to do with it in a simple game, where the objective was to change the real world for the better using the game and our collective money. Even at only $5 we all still would have “skin in the game” (a little money). Again we would make the business 100% transparent and then use collective intelligence systems to decide how to spend the money. This idea also seemed to peak interests.

We also played with the idea of avoiding the SEC by keeping the number of owners under 100 but having a higher buy in, like $10,000.00 each, but we did not post this publicly because an opportunity to do this actually presented itself and we are still trying to make it happen (stay tuned). Again the key would be for the owners to make decisions using collective intelligence. And the system would be 100% transparent for all of us to see at all times. We would still hire people to work inside the business in a top down fashion.

We would then use collective intelligence every where there was skin in the game within the business. The employees would have skin in the game via labor. The customers would also have it via their funds. All three groups - owners, employees, and customers - would have skin in the game, but just at different levels. With skin in the game, there is trust. And with trust their voice would be helpful for the business to solve problems.

Again, we will dive deeper into the idea of swarm owned businesses in an upcoming article (maybe with an update of a group of us actually trying to purchase one). Until then we wanted to stress that for collective intelligence systems to work, the people with skin in the game should be making the decisions. Right now that isn’t happening in most of our important systems. From academia to government to media, the people who have little to no risk are making the decisions for us, and the results are evident.

With the principle of “skin in the game” we can keep corruption at bay. We can also use it to build high trust societies, and with high-trust societies we can fix everything.

Thanks for reading!

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All problems that do not defy the laws of physics are solvable.
Solving problems is happiness.
And humans solve problems better in high-trust groups.
#CollectiveIntelligence

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For over 3 billion years on this planet there were only single-celled organisms. Then one day they somehow learned to work together and make complex multi-celled creatures . Right now we are like those single-celled organisms. Our next evolution is finding how to work together, better… (like we wrote about here).

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