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Zero-sum game

math Maturity 5-7 Next article →

Imagine you are sharing one cake with a friend. If you take a very large piece, your friend gets a smaller piece. The total amount of cake does not change. In math, we call this a zero-sum game.

The zero-sum three-person game
The zero-sum three-person game

In these games, one person's gain is another person's loss. If you add up all the wins and losses, the total is zero. Many games work this way. Chess, poker, and bridge are all zero-sum games. In these games, one player wins and another loses.

Interest Rate Swap Example
Interest Rate Swap Example

But not everything is a zero-sum game. Some situations are called non-zero-sum. This means people can both win or both lose. For example, one country might trade extra bananas for extra apples. Both sides get something they need. This makes the total benefit more than zero.

Math helps us find the best way to play. One way is called the minimax theorem. This helps players pick the best moves. Another idea is the Nash equilibrium. This is a way to find a steady balance in a game.

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File:The zero-sum three-person game.png
The zero-sum three-person game.png
File:Interest Rate Swap Example.png
Interest Rate Swap Example.png
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