| a game in which the sum of the winnings and losses of the various players is always zero, the losses being counted negatively. |
| zero-sum game n. A situation in which a gain by one person or side must be matched by a loss by another person or side: "It's not a zero-sum game in which either youth or pensioners must lose" (Earl W. Foell). |
A game in which the winnings of some players must equal the losses of the others. Zero-sum games are mentioned in a political context when it is believed that resources are limited, and every decision will produce both winners and losers. In such situations, political decisions will be made on the basis of trade-offs between competing interests.
Zero-Sum Game
A situation in which one participant's gains result only from another participant's equivalent losses. The net change in total wealth among participants is zero the wealth is just shifted from one to another.
Investopedia Commentary
Options and future contracts are examples of zero-sum games (excluding costs). For every person who gains on a contract, there is a counter-party who loses. Gambling is also an example of a zero-sum game.
A stock market, however, is not a zero-sum game because wealth can be created in a stock market.
Related Links
The Five Biggest Stock Market Myths
Options Basics Tutorial
See also: Game Theory, Option, Options Contract, Stock
Also spelled: Zero Sum
zero-sum game
| zero-sum game
A game in which the sum of the winnings by all the players is zero. In a zero-sum game, a gain by one player must be matched by a loss by another player. Poker is a zero-sum game if the house does not take a cut as a charge for playing. |