I always liked Nassim Taleb’s principle that you shouldn’t trust the judgment of people who don’t have skin in the game.
Charlie Munger thinks along the same lines: responsible, reliable systems must be designed so that people who make the decisions bear the consequences. “A CEO who’s there for five years while the company looks good, after which he’s gone on a pension, is not operating in a responsibility system like that of the Roman engineers”1
Berkshire Hathaway, 1993 Annual Meeting, cited in Outstanding Investor Digest (June 30, 1993). It is said that in Ancient Rome if a bridge fell because its construction was faulty, the engineers responsible for its construction would be beheaded beside the fallen bridge. They had skin in the game. ↩︎