Friday 22 July 2016

A continuous zero sum game is the worst scenario

A zero sum game is when the gain of the winners of a game is the same as the loss of the losers of the game. When players can always repeat their games in order to turn over or secure their positions in the games, the game can be repeated forever, as it is the best interest for the losers to repeat the game, and once the losers repeat the game, the winners also are forced into the game. There is a real world example of such phenomena. Currently, many countries tend to drag down their currencies' values; however, when all countries continue their currency depreciation policies, especially when they trade with each other, their trade balances will not be improved, as they beat down each other's prices, this could create a wide range of deflationary pressure. As we can see from this example, as the game repeats itself forever, there is no winner in the game and it also creates some negative effects, which spread among all players in the game.

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