A zero-sum game is a situation where one person’s gain is equivalent to another’s loss, so the net change in wealth or benefit is zero. If one person wins, another person must lose. The total gains and losses of all participants add up to zero.
- Games like poker or chess: There’s a winner and a loser; the winner’s gain equals the loser’s loss.
- Splitting a fixed resource: If two departments are dividing a fixed budget, more money for one means less for the other.
- Market share battles: In a highly competitive market, one company gaining market share often means a direct loss for its competitors.
A positive-sum game is a situation where the total of gains and losses is greater than zero. This means it’s possible for all participants to benefit, and the total “pie” can expand. It’s often referred to as a “win-win” scenario.
- International trade: Countries can specialize in producing goods they are efficient at and trade with others, leading to increased overall wealth for all involved.
- Technological innovation: New technologies can create wealth for inventors and improve living standards for users, resulting in a net gain for society.
- Collaboration: When companies or individuals work together, they can achieve more than they could individually, leading to mutually beneficial outcomes.