What is the concept of 'Skin in the Game' and why is it important in finance?

The concept of 'Skin in the Game' refers to the principle that people should bear the consequences of their own mistakes. Taleb explains this through the example of bankers who make mistakes where society loses money while they still receive bonuses - they enjoy the upside without facing the downside of their actions. This violates a fundamental rule of symmetry that dates back 3750 years to Hammurabi's law, which established accountability through severe consequences for failures. The principle ensures people are accountable for mistakes that harm others. When financiers lack skin in the game, they can take risks irresponsibly since they're protected from negative outcomes while still profiting from their decisions.