




In mathematical game theory, a zerosum 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 zerosum game, because a win for one player is a loss for another. Since the theory of a zerosum game has some straightforward implications, one of the first questions an economist will consider in analyzing a market is whether it should be modeled as a zerosum game or not. Very few business activities resemble a zerosum game. More typically, each side mutually benefits from an exchange. The stock market is sometimes mistaken for a zerosum 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 zerosum game; substantial wealth is created. To be a zerosum 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 zerosum game.
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