Move the downside onto the decision maker.
Taleb's skin-in-the-game principle asks whether people exposed to a decision's upside also face its downside.
Inside this model
Safe project: principal receives 8, agent receives 2. Risky success: principal receives 30, agent receives 10. Failure destroys L; the agent pays share × L and the principal pays the rest. The agent chooses the larger expected payoff, with ties favoring safety. Displayed payoffs transfer losses without double-counting them.
Out in the world
A practical use
Explore why a bonus tied only to successful launches may encourage different choices than a contract that also shares failure costs.
A useful lens. Not a universal law.
- Risk-neutral expected payoffs, enforceable liability and known probabilities are assumptions. Incentives do not capture ethics, ability, insurance or limited wealth.
Associated thinkers
Further reading
Explore the original research or the teaching reference behind this experiment.
Taleb — Skin in the Game ↗