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| Name | What is a Zero-Sum Game? |
| Video Uploader | Video From Investors Trading Academy |
| Upload Date | This Video Uploaded At 06-01-2015 04:30:02 |
| Video Discription | A situation in which one person’s gain is equivalent to another’s loss, so the net change in wealth or benefit is zero. A zero-sum game may have as few as two players, or millions of participants. Zero-sum games are found in game theory, but are less common than non-zero sum games. Poker and gambling are popular examples of zero-sum games since the sum of the amounts won by some players equals the combined losses of the others. In game theory, the game of “Matching Pennies” is often cited as an example of a zero-sum game. The game involves two players – let’s call them A and B – simultaneously placing a penny on the table; the payoff depends on whether the pennies match or not. If both pennies are heads or tails, Player A wins and keeps Player B’s penny; if they do not match, Player B wins and keeps Player A’s penny. This is a zero-sum game because one player’s gain is the other’s loss. Zero-sum games are essentially bets. In the financial markets, for instance, speculators essentially place bets on the future prices of certain commodities. Thus, if you disagree with the consensus that wheat prices are going to fall, you might buy a futures contract. If your prediction is right and wheat prices increase, you could make money by selling the futures contract before it expires. Zero-sum games have a bigger purpose in the markets, however; they provide a lot of liquidity to the futures market and help companies find a way to stabilize their prices and thus their operations and financial performance. By Barry Norman, Investors Trading Academy 8O3lhdRK1Ks |
| Category | Education |
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