Zero-Sum Game

Filed Under » ,
Dictionary Says

Definition of '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 Says

Investopedia explains 'Zero-Sum Game'

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.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Game Theory

    A model of ...
  2. Option

    A financial ...
  3. Options Contract

    A contract that ...
  4. Stock

    A type of ...
  5. Nash Equilibrium

    A concept of ...
  6. Prisoner's Dilemma

    A paradox in ...
  7. Tit For Tat

    A game-theory ...
  8. Iterated Prisoner's Dilemma

    A normal ...
  9. Diner's Dilemma

    A game-theory ...
  10. Tragedy Of The Commons

    An economic ...

Articles Of Interest

  1. The 5 Biggest Stock Market Myths

    Stocks that go down must come up, right? Wrong. We bust this myth and four other common market misconceptions.
  2. Are You Ready To Trade Futures?

    If you want to trade futures in the hopes that you'll become rich, you'll have to answer some questions first.
  3. Get Positive Earnings In The Negative-Sum Market

    Gain an advantage in the markets by understanding how to win in a negative-sum game.
  4. Options Basics Tutorial

    Discover the world of options, from primary concepts to how options work and why you might use them.
  5. Tips For Series 7 Options Questions

    We'll show you how to ace the largest and most difficult section of this exam.
  6. Are Derivatives Safe For Retail Investors?

    These vehicles have gotten a bad rap in the press. Find out whether they deserve it.
  7. Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  8. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  9. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  10. Finding Your Investing Comfort Zone

    Choosing the right investments for you is the best way to feel comfortable with your portfolio.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center