Saturday, July 26, 2014

Zero and Positive Sum Games

So maybe I'll win
Saved by zero
--The Fixx

A zero sum game is an exchange where one party wins while the other loses. For example, when government takes from some to give to others, some benefit from free economic resources while others lose their property.

A positive sum game is an exchange where both parties benefit. For example, when two people voluntarily engage in trade, both are typically better off than if they did not trade. The trade would not have occured had either thought that they would be worse off after the trade.

Some factors likely to influence the nature of the game at hand include availability of information and presence of aggression force. Zero sum games are more likely to be played by ignorant individuals. People who do not 'know better' might get 'taken.' The more information available, the more likely individuals are to engage in positive sum games.

Presence of aggressive force will coerce some into playing zero sum games. An individual might surrender money to a thief at the point of a gun. The lower the presence of aggression, the more likely that individuals will prefer positive sum games driven by mutual cooperation and volition.

1 comment:

dgeorge12358 said...

Bud Fox: How much is enough?

Gordon Gekko: It’s not a question of enough, pal. It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another.
~Wall Street