Skin in the Game: Hidden Asymmetries in Daily Life

people’s funds or has a family to feed.

Volatile things are not necessarily risky, and the reverse is also true. Jumping from a bench would be good for you and your bones, while falling from the twenty-second floor will never be so.

and thinking introduces is the illusion that each one of us is a single unit.

FIGURE 6.

ergodicity holds when a collection of players have the same statistical properties (particularly expectation) as a single player over time. Ensemble probabilities are similar to time probabilities. Absence of ergodicity makes the risk properties not directly transferable from observed probability to the payoff of a strategy subjected to ruin (or an

Via Negativa: in theology and philosophy, the focus on what something is not, an indirect definition, deemed less prone to fallacies than via positiva. In action, it is a recipe for what to avoid, what not to do—subtraction, not addition, works better in domains with multiplicative and unpredictable side effects. In medicine, stopping someone from

Never compare a multiplicative, systemic, and fat-tailed risk to a non-multiplicative, idiosyncratic, and thin-tailed one.

I can exercise courage to save a collection of kids from drowning, at the risk of my own life, and it would also correspond to a form of prudence. Were I to die, I would be sacrificing a lower layer in Figure 6 for the sake of a higher one.

In a strategy that entails ruin, benefits never offset risks of ruin.