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dc.contributor.authorSandis, Constantine
dc.contributor.authorTaleb, Nassim
dc.identifier.citationSandis , C & Taleb , N 2014 , ' The Skin In The Game Heuristic for Protection Against Tail Events ' , Review of Behavioral Economics , vol. 1 , no. 1-2 , 1 , pp. 115-135 .
dc.identifier.otherPURE: 10490864
dc.identifier.otherPURE UUID: 5204f7f8-8775-413a-a14e-da34eb90898b
dc.descriptionNassim N. Taleb and Constantine Sandis, 'The Skin in the Game Heuristic for Protection Against Tail Events', Review of Behavioral Economics, Vol. 1(1-2): 115-135, January 2014, doi: © 2014 N. N. Taleb and C. Sandis
dc.description.abstractStandard economic theory makes an allowance for the agency problem, but not the compounding of moral hazard in the presence of informational opacity, particularly in what concerns high-impact events in fat tailed domains (under slowness of convergence for the law of large numbers). Nor did it look at exposure as a filter that removes nefarious risk takers from the system so they stop harming others. (In the language of probability, skin in the game creates an absorbing state for the agent, not just the principal). But the ancients did; so did many aspects of moral philosophy. We propose a global and morally mandatory heuristic that anyone involved in an action which can possibly generate harm for others, even probabilistically, should be required to be exposed to some damage, regardless of context. While perhaps not sufficient, the heuristic is certainly necessary hence mandatory. It is supposed to counter voluntary and involuntary risk hiding — and risk transfer — in the tails. We link the rule to various philosophical approaches to ethics and moral luck.en
dc.relation.ispartofReview of Behavioral Economics
dc.subjectrisk management
dc.titleThe Skin In The Game Heuristic for Protection Against Tail Eventsen
dc.contributor.institutionSchool of Humanities
dc.description.statusPeer reviewed
rioxxterms.typeJournal Article/Review

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