Do You Have Skin in the Game?

Psychologists know that humans are not great decision makers. We screw up more than not. There are lots of reasons, and one of them is that we tend to ignore uncertainty and risk.

I am experiencing this right now. I have high blood pressure. I know that I do because I measure it. And yet, during the day, I am tempted to ignore that fact. I can hear myself ask “Do I really need to exercise? Just one glass of wine? You can always start tomorrow .,…” It is my subconscious tempting me to ignore the risks involved in my current state. Why? Not for any logical reason, but simply because it would be more comfortable to do so.

The same goes for people tasked with solving complex problems. Like, for example, the banking crisis, or the Syrian civil war.  The folks who decide what to do are human too. And as Nassim Nicholas Taleb points out, they often make decisions without taking any risk of failure.

It is no surprise, therefore, that their decisions often lead to failed results. Intervening in Afghanistan, Iraq and Lybia do not produce moderate and democratic new regimes. Surprise!

The reality is that nations and communities are complex systems. Tinkering with complex systems, without any understanding of how they work, is a fool’s errand. You begin to see this more clearly when you are there and have “skin in the game”. Less so when you are sitting in a comfortable office somewhere with a comfortable salary.  that is not an environment that lends an appreciation for risk.

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