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.