Zero-Sum and Positive-Sum Games

A zero-sum game is any interaction where the total payoff to all players is fixed, so every dollar one side wins is a dollar someone else loses — poker among a fixed set of players is the classic example, since chips only move around the table. A positive-sum game is one where the total payoff can grow, so it's possible for every participant to come out ahead at once — a voluntary trade, where both sides get something they value more than what they gave up, is positive-sum.

The distinction matters for how you should think about strategy. In a zero-sum game, helping your counterpart is never in your interest — anything you can do to make them worse off (within the rules) directly helps you, so trust and cooperation have no natural role. In a positive-sum game, the two sides can genuinely both benefit from coordinating, information-sharing, or building trust, because there is more total value to be created, not just divided.

Trading itself is often misdescribed as zero-sum. A single options trade between two counterparties, where one side's mark-to-market gain is the other's loss, is zero-sum in that narrow sense. But the broader market — where a company raises capital to fund a factory, or an investor gets liquidity to fund retirement, or a farmer hedges a harvest — is positive-sum: each party is trading away something they value less for something they value more, and society ends up with more total welfare, even though any single trade's P&L still nets to zero between the two direct counterparties.