Is Business Strategy a Non-Zero-Sum Game?

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Is Business Strategy a Non-Zero-Sum Game?
Ryan, USA
I found that a ZERO-SUM GAME is a game with a clear winner and one or more clear losers. The more outcomes or results one player receives, the fewer outcomes or results are available for the other players. In other words, in zero-sum games the total benefit to all players in the game, for every combination of strategies, always adds to zero.
In a NON-ZERO-SUM GAME on the other hand, there is not a fixed pie of outcomes or possible results, there is an opportunity for all players to maximize their outcomes simultaneously. In a worst-case scenario the outcomes of one player do not remove outcomes from any other player. And in a best-case scenario, the outcomes of one player may be interdependenty linked to the maximization of the other players' outcomes.
Often (typically) business strategy is seen as a zero-sum game, but it has elements of both game types ... What are NON-zero game characteristics of business strategy?

Rational or not
Ian Sutherland, UK
As I understand it, game theory persumes that players on the same side have the same motivation. In business this is rarely true and often it is hard to find anything other than a superficial commonality of purpose. Instead there is a great tendency in this world of short term views for each person to promote their own personal agenda, often at the expense of the greater good. This may what was meant by the comment that not all behaviour is rational. I would argue that it is usually rational in the framework used by the individual, but that there is rarely a similar "framework" for the group or business.
This means look at the individuals if you want to truly understand. Or as is often said in my field "follow the money!"

Assumption of Utility
Mary, USA
Indeed Ian, another game theory assumption is that all participants are motivated inherently to maximize their utility (economic measure of desired outcomes). Von Neumann and Morgenstern understood this distinction; to accommodate all players, whatever their goals, they constructed a theory of utility. They began by listing certain axioms that they thought all rational decision makers would follow (for example, if a person likes tea better than coffee, and coffee better than milk, then that person should like tea better than milk). They then proved that it was possible to define a utility function for such decision makers that would reflect their preferences.

Utility variations
Jaap de Jonge, Editor, Netherlands
Note that there could be conflicting group and individual utilities and short-term and long-term utilities.

Business is a NON-zero sum game
srikanth, India
I think the definition of "ZERO SUM GAME" by Ryan is slightly wrong.
A "ZERO SUM GAME " is a game in which the total of all the gains and losses is zero and not the total benefits of all players in the game. So in a real market scenario, when one player tries to gain (the player could be a STAR OR A CASH COW as the case may be), it has to be at the expense of another player. The case varies if the players are competing in different domains and these players are not on the same page.
A "NON ZERO SUM GAME" is a different concept, where players are all benefitting from a situation without cutting each other.
All real-life business situations are NON ZERO SUM GAMES. Any differences of opinion are always welcome!

Free Market Exchanges
Richard D. Cushing, USA
I would add to and extend srikanth's (India) statement to say this: All real-life business exchanges in a free market are non zero-sum games. The assumption in a "free market" exchange is that none of the participants in the exchange are employing fraud or coercion to effect the outcome of the exchange.

Game Theory literature
Gillion Utens, The Netherlands
Recommended literature on this subject: Robert Axelrod - The evolution of cooperation (1981). Or watch the BBC documentary "Nice guys finish first" on YouTube (Richard Dawkins 1987).

Bas, Netherlands
As was said in the article, this is just a simplification. In the real world, no two consumers are the same.
Companies can differentiate on hundreds of details and change the mental image that consumers have of a company or product. Therefore, one company's gain does not necessarily mean another companies loss.


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