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Shared Risk Is More Rational
Sometimes, people want leaders to take all of the risks without any real downside if they fail.
Recently, former PGA champion Rich Beem was challenged to a competitive wager by an amateur who had great confidence in their golf game.
The amateur asked Beem to play for $10 a hole, as long as he could receive two shots on the front nine and two shots on the back nine. Beem countered by creating risk that both parties could share: “Let’s play for $500 a hole, and I give you four shots a side,” replied Beem. When the amateur demurred, Beem then said, “Let’s just have some fun.” Which is what he wanted all along.
Don’t let others suggest you should take all or most of the risk in anything. Risk shared means everyone has skin in the game. People always behave more rationally when they have something of equal value to lose.