Zero-sum game

Updated: Aug 20, 2021

A type of game, analysed extensively in the theory of games, in which the gains and losses of the ‘players’ sum to zero for every possible choice of strategies. For example, suppose there are only two players, firrn A and firm B, which between them control 100 per cent of the market for a particular product. Whatever increase in market share firm A might gain will be exactly equal to the loss suffered by firm B. Thus the game is zero-sum. The importance of this type of game is that the players are in pure conflict. There is no scope for joint action to increase the total sum of pay-offs.

Reference: The Penguin Business Dictionary, 3rd edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.