The Negative Sum Game (–Σ), which we will call Fundamental Principle 4b. By all superficial measures this starts out looking like a Zero Sum (0Σ) game (see previous blog entry), but it’s not. It comes with a twist – namely,
Some of the “readily identifiable valuable items,” the stakes or “beans” at the start of the Game, are taken or begin to disappear before the payout at the end.
The most commonly recognized example is gambling at a casino, and in particular at Roulette. In Roulette, the House (casino) pays out 36:1 if an individual number from 1 to 36 comes up, but there are actually 38 spots: the numbers 1-36 and 0 and 00. Those extra two spots mean that about 5.2% of the time the House does not pay out a winner and thus pockets its “take.”
In a Negative Sum (–Σ) game there may be various ways the “beans” or the sought after items of value seem to disappear, and this can be devastating in its effect:
- The “external agent” – basically the casino example above where someone or something external to the players removes or “takes away” some of the items of value that had been in play at the beginning, slowly and not so obvious. Another example might be the kids having fun playing “War” for M&Ms, and Daddy comes along and takes a few and eats them. Quick and highly visible. You can sense the consequences – everyone feels a loss, except perhaps for Daddy.
- “Your opponent” removes them. You are outbid for an item in an auction; either you lose the item or you up your bid (costs you more).
- “You” remove them. In the auction for the next item, you bid high and early. You’re playing games, aren’t you. Looking for an easy gain or an advantage.
- “Time” removes them. A TV game show where a decision must be made while at the same time a HUGE loud clock decreases the available winnings as it ticks off the seconds. Or an infomercial ad promises “buy one and get one free, but only if you call in the next 30 seconds.” (If you hesitate, the “free shipping” gets you every time).
Some further examples:
- (Opponents) Macy’s Thanksgiving Day Lingerie Sale Fights – Whether this actually happened or was a fictional event for a movie I cannot find – women literally fighting each other (and throwing elbows) over sale items and not letting go until the items ripped. Literally an actual “half off” sale. Another recent example was when customers were trampled when stores opened at 4:00am on Black Friday.
- (External Agents – “Insiders”) Insider stock trading. Something of value (information) is used or withheld that subsequently alters the outcome for the other market participants (players).
- (External Agents) Instances some 30-40 years ago where audited charities were found to be only distributing ~30% of their raised funds to the intended beneficiaries, and using ~70% for “administrative purposes” (salaries and lavish “fund raising” events, for example). In another real situation, food donated for needy countries is subjected to “significant losses” before it gets to the masses.
- (Opponent) At a carnival when you buy $10 of chances to knock over three bottles to win a $0.50 stuffed animal (or dying goldfish). Even the “entertainment” isn’t worth that much, although a quiet, happy kid probably is.
- (Opponent) In Sharktank (the TV program) when one of the investor sharks drops the offer because the entrepreneur hesitates and waffles over whether or not the earlier offer was rich enough.
- (External Agents) You have invested in Greek Eurobonds and suddenly find that the European Central Bank (and others) have negotiated a decrease in the bond face value of 70% so that rather than complete default (0% return), there is some chance of everyone getting something. Like, $0.30 on the dollar. (BTW, why “suddenly?” Where have you been?)
Once again a new question presents itself: what if the “valuable” items at stake are intangible, or a mix of tangible and intangible and are removed or tarnished?
- Lost Status, Self-esteem: When another person (“bully”) made disparaging remarks about you when you were in school, or someone made a joke about your choice of clothes the first time you wore them. Or when someone cut you off on the road, and then rolled down the window to vent foul language at you.
- Lost Integrity: A competitor makes disparaging remarks about your products and services to a potential customer while at a trade show.
- Lost Credibility: A heckler in the audience makes unsupported accusations and calls you a liar in a public meeting.
- All of the above: An incumbent candidate runs a vicious TV attack ad against you that is based on incomplete and misinterpreted information (aren’t they all).
You should notice that one common thread runs through all of the examples above, both for the tangibles and intangibles, and probably for most other examples that you can think of as well: Greed. It’s about recovering or “breaking even” (for the tangibles) or “saving face” (for the intangibles). Conclusion:
Greed is a Negative Sum Game.
Somehow we usually have a sense when we suddenly find ourselves in a Negative Sum
(–Σ) situation and we don’t react as if it is a game. If we can’t alter the circumstances into a 0Σ game (“break even”), then we shift instinctively to survival mode and make a choice – “fight or flight.” Both of these choices are, in fact, –Σ, but in the latter it’s to cut one’s losses.
In the 1960s, Eric Meade publish a book called Games People Play which helped create the pop psychology genre as well as establish transactional analysis as a legitimate field. I only recently came across the book again and now remember reading it at the time. Almost all of the games he describes are between two people, occasionally more, and are Negative Sum games – examples of Destructive Behavior. The categories I propose are much broader, don’t have a lot of specific game names to memorize, and I hope should be easier to recognize and lead to an appropriate choice of behavior response.
Unfortunately, these two “games,” Zero Sum and Negative Sum, dominate our normal experience and worldview.
Is there another alternative, and is it real or just a figment of someone’s imagination?