Zero-sum

Zero-sum describes a situation in which a participant can only gain at the expense of another participant. The concept was first developed in game theory, so that zero-sum situations are often called zero-sum games[?] regardless of whether the situation is a game.

Zero-sum situations exist only where there is a fixed supply of a resource. Otherwise a situation is said to be non-zero-sum. To treat a non-zero-sum situation as a zero-sum situtation, or to believe that all situations are zero-sum situations, is called the zero-sum fallacy[?].

Games provide a very good illustration of the zero-sum principle. In many common games, one player or team can win only by making the other player or team lose. In league sports, for instance, at any given moment in the season the number of wins must equal the number of losses - the league average must be .500 - because every win implies the loss on an opponent. In a tennis tournament there is only one championship position. A player can win the championship only by denying it to all other competitors.

Zero-sum situations are not limited to games. The mating behavior of many animals is a zero-sum situation, because in any given breeding season the number of receptive members of the other sex is fixed. This is especially true of polygamous species, where one individual can successfully mate with numerous members of the other sex, thereby depriving numerous members of its own sex the opportunity to reproduce.

The economics of a purely hunter/gatherer society have zero-sum properties because the supply of goods such as food is fixed by what nature has to offer. If one person succeeds in obtaining food, there is less food to go around for everyone else, so that one person's benefit implies a cost to others.

Certain financial markets display zero-sum characteristics. In a futures market, all trades at the end of the day must balance out, such that every dollar that is gained by one participant must have been lost by another. This is not necessarily the full picture, however, as some participants may be hedgers[?] whose loss in the futures market is essentially a cost paid to reduce risk elsewhere, which is a partially offsetting benefit. Additionally, considerations of marginal utility show that a dollar need not be of equal value to all participants.