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Is Business Strategy a NonZeroSum Game?
Ryan
I found that a ZEROSUM 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 zerosum games the total benefit to all players in the game, for every combination of strategies, always adds to zero.
In a NONZEROSUM 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 worstcase scenario the outcomes of one player do not remove outcomes from any other player. And in a bestcase 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 zerosum game, but it has elements of both game types ... What are NONzero game characteristics of business strategy?




Rational or notIan Sutherland 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 UtilityMary 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 variationsJaap de Jonge, Editor Note that there could be conflicting group and individual utilities and shortterm and longterm utilities. 



Business is a NONzero sum gamesrikanth 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 reallife business situations are NON ZERO SUM GAMES. Any differences of opinion are always welcome! 



Free Market ExchangesRichard D. Cushing I would add to and extend srikanth's (India) statement to say this: All reallife business exchanges in a free market are non zerosum 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 literatureGillion Utens 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). 



DifferentiationBas 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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