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Paras Chopra @paraschopra
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1/ I finished @nntaleb's new #book Skin in the game, and here are my learnings, insights and notes.

Warning: this thread is going to be huge.
2/ Human systems are systems within systems, interacting in complex ways. No article / paper / logic can capture all interactions of such systems and their evolution over a non-trivial amount of time.

So fear one shot, large scale interventions (such as invasions, UBI, CRISPR)
3/ People with fuck you money should call out famous or powerful people when they are wrong
4/ A scientific result takes a slice of the world that’s impossible in reality. Our real world is dynamic, full of interactions and any static slice necessarily misses that
5/ Time is the ultimate test of robustness.
6/ It’s safer to describe the past than to predict the future, but if you must predict it, you must share its downside

Earlier, I wrote about predicting the future:…
7/ When a thing is described, the limitations imposed by the need to hold that concept in mind and communicate it to others isn’t generally recognised as limitations. In reality, the thing (say voters in Bihar) has a history, embedded in other things, interacts with other things
8/ Our perception of roles that people are playing in a system are usually static and short sighted. We forget. But history doesn’t care. It tends to eliminate bad systems.
9/ Anyone who doesn’t share downside will transfer risks from himself to someone else. Net-net, in systems, you can’t have upside without downside
10/ Understanding and respecting the way people act is more important than telling them how they should act.
11/ Ethics is about sharing downside if you have a shot at an upside
12/ A deterrent works because actors then take informed risks. If there’s no deterrent for bad behaviour, people will maximise their self interest at the expense of others
13/ Groups change behaviour as they scale. You can’t empathesize in a city just the way you empathsize in a village
14/ Since reality is multi-dimensional, evidence of achievement (of something) in the real world is always more informative than being able to explain why something would work
15/ Central, top-down planning of any kind (say an intervention) introduces risks in complex systems that are hard to estimate. While bottom-up solutioning as done by entrepreneurs is safer because it works within existing boundaries of system.…
16/ Labels are poor carriers of information. Clubbing twitter and Facebook as social networks misses their details, similarly clubbing Buddhism and Wahhabi as religions and saying all religions should be tolerated misses the point.

Details matter:…
17/ What people do (revealed preferences) are usually different from what people say (stated preferences). Skin in the game comes only via what people do, not what people say
18/ Entrepreneurship isn’t about major changes, it’s about tweaking existing interactions /solutions a little bit to discover something more acceptable within a system. A large change (visionary idea) by definition is fragile in the system
19/ Most people can’t compute probabilities so they rely on well tested, age old heuristics
20/ Rationality can be defined as survival, so whatever promotes survival over long period of time for individuals or collective is rational. If rituals have survived over millennia, they’re surviving a function that helps the population that holds them survive
21/ Rationality is risk management
22/ Survival comes first. In cost/benefit analysis, is there’s a chance of you going bust then eventually you will (if you keep playing the game)
23/ Ergodicity means present probabilities continue to remain similar to past probabilities. Non-ergodicity means the system gets ‘stuck’ in a state from which it’s impossible to come out of (human actions cause climate to go only in one direction, it is becoming non-ergodic.)
24/ Systems at different levels are ergodic or non-ergodic (my death converts me from ergodic to non-ergodic system but high level system can still be ergodic)
25/ Take a lot of risks that don’t have tail risks but may have tail profits (starting a company might be the best example of it. Downside a job and one year lost, upside $100m usd)
26/ All risks are not equal, Risk and ruin are two different things
27/ Whenever numbers are mentioned, immediately visualise distribution and their possible evolution. Number of people dying from Ebola being lesser than number of people dying on bathtub is an idiotic statement. Ebola mutates and can spread, bathtubs are isolated incidents
28/ In psychology experiments, we derive results from one or few interactions / actions per individual but in the real world behaviour of individual (trust, loss aversion) is determined by repeated interactions and people want to avoid ruin by repeat exposure
29/ Points that I don't agree with:
30/ For measuring robustness, recent history should be given more weight because the interaction types also change over time. Humans spent vastly more time as hunter gatherers as rural as urban. Underlying structure changes => our assessment of what works and what doesn’t
31/ Always applying simple heuristics can backfire. For example, he says that a professional who dresses impeccably should be trusted less (conditional on their achievements) or people who go to Ivy-league vs non-Ivy league (conditional on achievements) should be trusted less
32/ In reality, it depends. Taking his own words, absence of evidence is not evidence of absence. A person can be soft-spoken, well-dressed and authentic. Similarly, a shabbily dressed doctor can really be clumsy. Signals exist because society values them
33/ A doctor who takes care to dresses well advertises that he is methodical and that’s what the patient may be looking for as it gives him hope.
34/ Where I think Taleb is inconsistent: He says religion and superstition are acceptable because they serve some societal purpose not directly related to supernatural but same acceptance doesn’t apply to a rich person who goes to Michelin’s rated restaurant
35/ That rich person might be going to expensive restaurant not for food (purported function) but to be able to signal wealth to friends (actual function)
36/ That's all. It was an excellent book but Taleb's pugnacious personality makes him closed to taking feedback. For example, one find day he blocks me from his twitter for giving him feedback:
37/ I really want to like Taleb, and once he was my hero:

But now, his ideas (that I find useful) are my heroes. I've stopped worshiping people, personalities make them fallible. His impolite and disrespectful name calling is horrible.
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