Define: Zero-Sum Game

UK Accounting Glossary

Definition: Zero-Sum Game


Quick Summary of Zero-Sum Game


In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant’s gain or loss of utility is exactly balanced by the losses or gains of the utility of the other participants.



What is the dictionary definition of Zero-Sum Game?

Dictionary Definition


A game in which the sum of the pay-offs to players is zero for every outcome.

In a non-competitive two-player zero-sum game a positive pay-off for one player implies a negative pay-off (of equal value) for the other player.

Zero-sum games represent direct opposition between the interests of the players and examples are often used to method to model conflict.


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Full Definition of Zero-Sum Game


In mathematical game theory, a zero-sum game is a game in which losses of some of the players are exactly offset by gains of other players. Chess, for instance, is a zero-sum game, because a win for one player is a loss for another. Since the theory of a zero-sum game has some straightforward implications, one of the first questions an economist will consider in analyzing a market is whether it should be modelled as a zero-sum game or not. Very few business activities resemble a zero-sum game. More typically, each side mutually benefits from an exchange. The stock market is sometimes mistaken for a zero-sum game since one player’s payment to buy shares is exactly matched by the other player’s payment received for selling. The stock market is far from a zero-sum game; substantial wealth is created. To be a zero-sum game, all stocks would have to eventually revert back to the price at which they started trading. In contrast, the futures market is recognized as a zero-sum game.


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Definition Sources


Definitions for Zero-Sum Game are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th May 2019.