Skin in the Game is about the dynamics of the behaviors of people when their actions have downside risk along with the potential reward. Too many executives and politicians have all the upside reward from compensation and none of the risks of ruin that their actions can cause, this is a big problem in our modern world that Mr. Taleb addresses in great detail.
The book is overall about four things:
1. The difference between knowledge and reality. Having information is not the same thing as having experience executing successful long term methods in reality.
2. Symmetry in life through fairness and justice. People being held responsible for their actions and good behaviors being rewarded in magnitude of the value produced.
3. Full disclosure and information sharing in transactions.
4. Using reason and logic in complex systems and in the real world in the long term.
Mr. Taleb explains and sets forward his case that skin in the game is necessary for fairness, commercial efficiency, risk management, and to understand how the world really works. Academia is not the real world, pain and results are the best educators in the majority of careers, businesses, and life. The point of this book is that in the real world it is hard to disentangle ethics on one hand from knowledge and competence on the other. Theories, college papers, and books fall short from experiential knowledge, contact with the real world is only done through skin in the game, you have to leave the classroom, boardroom, or legislature.
Historically with few exceptions, societies were run by risk takers not risk transferors. Skin in game was more of a filter than a deterrence. It keeps human hubris in check and direct consequences of behaviors removed bad actors from participation eventually and permanently.
Skin in the game removes the fragile and keeps the robust and the survival of the nonfragile lengthens with time creating a stronger world that benefits the majority.