counter statistics

Zero Sam game of profit and loss in economy and politics

Suppose you see a fun cake on the table in front of you. Cake is one but man you are not alone. You have your friends with you. You both want to eat the cake. Considering this situation in general, it would seem that you will eat the cake in two. But you don’t want to share. They both want to eat the whole cake themselves. In this situation, both of you have fallen into the Zero Sam game. Although in real life the Zero Sam game does not work so simply. There are many complex accounts of politics and economy.

What is Zero Sam Game?
Zero Sum Game is a part of the famous game theory. This means that in any case, if two or more parties want to get a certain thing, one party will lose the same amount of wealth as the other party will gain. The net result will be zero.

Let’s go back to the cake example. If you can take the cake then you will get +1 and your friend will get -1. This will change the net of the two + 1-1 = 0. No new cakes have been made here, nor has the amount of existing cakes been reduced. Chess, tennis or gambling can be called a zero sum game. Because in these games one side wins, the other side loses. There are some examples of Zero Sam game in our daily life. For example, the time you spend on Facebook may cause you to lose your study time.

Features of Zero Sam game
If the amount of wealth is less than the demand, the other party has to give up the amount of wealth that one party gets. In this case we can talk about the early period of coronavirus infection. There was a shortage of kits to detect the virus then. So some people were able to test corona identification then, some could not. It was also the Zero Sam game. But if there is only one side, it will not be a Zero Sam game. Suppose you want to eat the cake on the table, but your friend does not want to eat. In that case it will not be Zero Sam game. This is called net gain or profit. Here your net profit will be +1. But your friend’s net gain or loss will be nothing.

Zero Sam Game vs. Game Theory
Game theory is used theoretically in a wide range of economics and politics. Part of this is the Zero Sam game and the non-Zero Sam game. Generally, international bilateral or multilateral agreements have a win-win situation for all parties. Again in some cases all parties are affected. For example, in a war, all sides suffer more or less. These are the ‘Non Zero Sam Game’. In the case of the Zero Sam game, if one side gains, the other side loses exactly the same amount. Theoretically Zero Sam game problems can be solved in three ways. The most famous of these is the Nash Equilibrium or Nash Equilibrium.  No one can choose any alternative. It’s just a theoretical idea.

Multiplayer Zero Sam Game
Most of the examples in the Zero Sam game are bilateral. In almost all cases it becomes mathematically impossible to show. In the case of Zero Sam games, there can be any number of parties, as long as their net profit and loss is zero. Suppose the manager of a company decides to give a bonus of five thousand rupees to his five employees. In this case, he can pay one thousand rupees to each of the five employees. But not all employees can show the same performance. So the one who has performed well will get more bonus and the one who has performed poorly will get less bonus or not.

Suppose another manager gives a bonus of Rs 2,000 to one of his three employees and Rs 500 to the other two employees. Then the net change will be +1000, -500, -500; Which will turn into 0/0. The net profit and loss of three people will also be zero.

Zero Sam Game in Politics and Economics
Zero Sam thinking is most common among politicians. In this case the selection is a Zero Sam game. Because if one voter votes for one party, the other party loses that vote. If one party wins the election, the other party loses. As a result, net profit and loss is zero.

Zero Sam games are often seen in politics and economics at the same time. Former US President Donald Trump thought a trade deal with China was a zero-sum game for America. Because only China is benefiting unilaterally. Neither Trump nor the Conservative Republicans think that the arrival of immigrants in America is a kind of zero sum game. Because Americans are losing their jobs.

In the case of trade, if one buys a product from one party, the money goes to the other party. This may seem like a zero sum game for those who buy the product. But trades may not actually be Zero Sam games. Suppose a country produces a lot of coal, so the price of coal in that country is cheap. But there are no coal mines in the neighboring country. So the price of coal is also high. That country can then buy cheap coal from the neighboring country. One side can earn foreign exchange by exporting coal, the other side can get cheap coal. It became a win-win for both of them.

Again, liberal Democrats in America see the unbridled growth of billionaires as a zero-sum game. Income inequality is increasing as the rich do not have high taxes. The rich are getting richer, the poor are getting poorer. But Republicans believe that lower taxes would expand their business and create new jobs. So they don’t see it as a Zero Sam game.

Some see the stock market as an example of a zero-sum game. Because here the amount that one investor gains, the same amount of loss that another investor can make. Although it is not so simple. In the real world, lumbering elephants are exposed by the aggression of speeding midgets.

Related Posts