zero-sum game

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.

Notes:

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.

See also: Game Theory, Option, Options Contract, Stock

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Zero-sum game

A type of game wherein one player can gain only at the expense of another player.

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zero-sum game

A situation in which one person's gain must be matched by another person's loss. Without considering taxes and transaction costs, many types of investing, such as options and futures, are examples of zero-sum games.