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The Zero-Sum Bias: When people think that everything is a competition

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Re: The Zero-Sum Bias: When people think that everything is a competition

#141

Post by conanbatt »

username90 wrote: post #128
conanbatt wrote: post #113

Earlier quoted context omitted.

It technically isn't, because if everyone forgives each other's expenses they can be infinitely rich as the bank never run out of money.

Money in monopoly doesn't matter except as a means to increase your probability of winning. The probability of winning is zero sum.

Thats not the use of zero-sum used in economics or in (some applications of) game theory: any game with a discrete victor is a zero-sum probability of winning.

What is not zero-sum is the amount of money/points floating in monopoly. If you played a monopoly tournament where players can resign, and at the end of the game you sum up all the money as points for a final ranking you would see monopoly is truly non-zero-sum.

Re: The Zero-Sum Bias: When people think that everything is a competition

#142

Post by conanbatt »

11thEarlOfMar wrote: post #67
pessimizer wrote: post #64

I see this most clearly in people who will not trade in a board game like Monopoly unless the deal is extremely slanted in their favor. They simply can't understand that people who trade will always beat people who don't, and the easiest way to trade is to trade fairly. If four people are playing a game of Monopoly, and two trade with each other but the other two refuse, now two people are playing Monopoly and the ot…

It's one of my all-time favorites. My favorite 'house rule' was invented by my nephew: He negotiated a % of rent I collected utilizing properties he traded to me.

Derivatives trading in monopoly is pretty evil.

Re: The Zero-Sum Bias: When people think that everything is a competition

#143

Post by andrewtbham »

andrewtbham wrote: post #10
umvi wrote: post #6

This will be controversial, but this is true everytime there is a pitchfork-inducing "the rich got richer in 20XX" thread. But it's not that the rich stole from the poor in order to become richer (though undoubtedly people will argue this). If I stick a million dollars in an index fund and passively get richer, am I stealing from the poor? Wealth is not zero sum, yet we seem to treat it like it is (in order for poor…

PG often tries to make this point.

The Pie Fallacy

A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world.

http://paulgraham.com/wealth.html

Re: The Zero-Sum Bias: When people think that everything is a competition

#144

Post by belorn »

godelski wrote: post #132
belorn wrote: post #131

Earlier quoted context omitted.

> I wouldn't call this a zero nor negative sum game if the game is to gather resources yes, that would not be a zero sum game. If the game however is about wealth there are things like status symbols which drain resources but increases perceived relative wealth. Would you agree that status symbols with no intrinsic value are a zero sum game? Could a status symbol for wealth work if everyone had it and could afford it…

I'm not sure why you are shifting to status symbols though. I'm talking about things that make people better off. Money, widgets, access to clean water, and medicine. Sure we can talk about status symbols, but it seems kinda contrived to make your point and not the one that we originally started with or have been discussing. So unless you have a good reason for that digression I'm having a hard time seeing this as an…

When people use imagery to illustrate wealth, for example in a video or say the Wikipedia article for wealth (https://en.wikipedia.org/wiki/Wealth), we see things like gold. Google images for wealth displays jewelry. Expensive cars. Expensive boats. Expensive mansions.

Resources would be food, clean water, shelter, land, gasoline, things which purpose fulfill a specific need.

I would say that the first thing, wealth, represent a zero-sum game. The value of such items goes down as more people has them, and thus the status of owning them goes down as more people has the same item. Resources however is not a zero-sum game. The value of clean water will always be high regardless of how many other people have clean water.

Money in itself sits between wealth and status. It can be used for both, through at some amount it turn from resource and become just accumulated wealth.

Re: The Zero-Sum Bias: When people think that everything is a competition

#145

Post by BurningFrog »

luckylion wrote: post #46
BurningFrog wrote: post #37

Earlier quoted context omitted.

All trade is a victim of this. In reality, trade always creates value, and you can argue that all wealth in the world is created from trade, most of it interpersonal. But people still feel instinctually that each transaction has a winner and a loser.

That'll likely depend on the definitions of trade and winning/losing. If you're starving and I'm the only one around and I sell you a loaf of bread for a million dollars, did we both win? Sure, you'll live another week, but I sold you a bread that you'd usually pay a few bucks for and got a million in return. If I'm paying the mafia for protection, do we both win? Sure, my restaurant doesn't burn down, but if the maf…

It certainly does depend on the definitions.

The unstated assumption is voluntary trades in a system of private property rights. Under those conditions, neither side will agree to the trade unless they benefit from it, so value is created for both sides.

So the mafia protection fee is a robbery, not a trade. The mandatory membership probably too.

The bread loaf is a trade, and both people undeniably profit.

Emotionally, it feels "exploitative", but if you think about it, things are less clear. In reality, people stock up food to be prepared to sell it during famines in order to make profits. But this is often made illegal as "profiteering", and as a result no one stock up food, and more people die when the famine comes.

Re: The Zero-Sum Bias: When people think that everything is a competition

#146

Post by BurningFrog »

rightbyte wrote: post #47
BurningFrog wrote: post #37

Earlier quoted context omitted.

All trade is a victim of this. In reality, trade always creates value, and you can argue that all wealth in the world is created from trade, most of it interpersonal. But people still feel instinctually that each transaction has a winner and a loser.

Are you including "daytrading"/algorithmical short term trading when you mean trading creates value?

I do. Though admittedly it's harder to see it there :)

If I ran a stock exchange, I'd look into changing the trading system so trades just happened on even seconds or something, so all this deadweight spending of billions on nanosecond trading advantages could end.

Re: The Zero-Sum Bias: When people think that everything is a competition

#147

Post by antidesitter »

KirinDave wrote: post #83
petra wrote: post #81

Earlier quoted context omitted.

Sophisticated cooperation at the scale of the tribe. On the other hand, the market system is a system of massive economic cooperation, and very sucsesful in many important ways. But it's not a great fit for human psychology.

> Sophisticated cooperation at the scale of the tribe. People claim this but it seems to ignore evidence that invalidates all but the least informative definitions of "tribe." > On the other hand, the market system is a system of massive economic cooperation, and very sucsesful in many important ways. I think "successful" is doing a lot of heavy lifting in this sentence.

> I think "successful" is doing a lot of heavy lifting in this sentence.

How?

Re: The Zero-Sum Bias: When people think that everything is a competition

#148

Post by mikeash »

leetcrew wrote: post #104
mikeash wrote: post #76

Earlier quoted context omitted.

It occurs to me that there’s a simpler way to put it: wealth creation is not a zero sum game, but wealth allocation is.

I don't think this is a very good way of putting it. if wealth creation is disconnected from allocation, the creation part isn't really a "game" at all; there's no reward function. the second part, that wealth allocation is zero sum is literally true, but only in the tautological sense that there's no way to divide a pie such that the pieces add up to more than one pie. it's not very useful to assume you already have…

I think it's useful because it gets you thinking about which category various things fall into, and how they're connected.

For example, business growth is usually wealth creation. We shouldn't think badly of successful businesses (unless they're taking advantage of externalities or similar). However, pay is wealth allocation. Pay going to executives versus workers versus charity versus taxes is a zero-sum game, but we're OK (for certain values of "we") with executives getting a huge slice of that pie because we're pretty sure it helps drive the wealth creation side of things by providing incentives.

It gets you thinking about what incentives you need, what sort of behavior they drive, what sort of behavior we want to drive, etc.

Far more useful and interesting than the typical story of "wealth is not a zero-sum game, rich people don't take anything away from poor people, The End."

Re: The Zero-Sum Bias: When people think that everything is a competition

#149

Post by godelski »

belorn wrote: post #144
godelski wrote: post #132

Earlier quoted context omitted.

I'm not sure why you are shifting to status symbols though. I'm talking about things that make people better off. Money, widgets, access to clean water, and medicine. Sure we can talk about status symbols, but it seems kinda contrived to make your point and not the one that we originally started with or have been discussing. So unless you have a good reason for that digression I'm having a hard time seeing this as an…

When people use imagery to illustrate wealth, for example in a video or say the Wikipedia article for wealth ( https://en.wikipedia.org/wiki/Wealth ), we see things like gold. Google images for wealth displays jewelry. Expensive cars. Expensive boats. Expensive mansions. Resources would be food, clean water, shelter, land, gasoline, things which purpose fulfill a specific need. I would say that the first thing, wealt…

Well I suggest reading carefully that first paragraph from Wikipedia. It does agree with me but I'll give you that it says it can be context dependent and you are talking about what it is considered "to be wealthy". In that context, I think if you considered the average person a hundred years ago to a average person today, the person today would be considered wealthy (to the person from a hundred years ago).

But to quote the first sentence of the second paragraph

> At the most general level, economists may define wealth as "anything of value"

Which is why Saudi Arabia is "wealthy", because they are rich in oil resources.

> Resources however is not a zero-sum game.

Great, we're done here, right? We agree?

To a person with access to clean water, having access to clean water does not make one wealthy. To someone that doesn't it does. But this is the difference between the economic term of wealth and the colloquial term of "to be wealthy". (Though we can say that all westerners are wealthy if we take the right perspective, but I won't get into that).

I actually will get into that. You're taking this from a western-centric point of view. Not only that, a temporally local point of view. I'll ask you to reread my original comment now that there is added context given. Specifically that laid out in this paragraph. I'm not talking about money. The value of money is a result of the economy, not the other way around. You're conflating things that don't interact that way.

Honestly I don't even understand your point. Because I'm saying things like "We have AC and good medicine. Our ancestors a thousand years ago had neither. Ipso facto, we're more wealthy". I have absolutely no idea why people with expensive things discredits this argument. I'd even argue that while off topic, if anything it helps mine. Because previously only monarchs had that kind of wealth, now we have almost 15 million millionaires in America alone. That's like the global population of 5000 years ago. You can also find my link to the world bank that shows the number of people living in extreme poverty (globally!) has been plummeting. These are the kinds of things I'm talking about. Not that some rich person has a nicer house than you. But that there has been a trend where everyone everywhere is doing better than they were before (given the time scale).

Re: The Zero-Sum Bias: When people think that everything is a competition

#150

Post by JetSpiegel »

godelski wrote: post #126
Existenceblinks wrote: post #107

Earlier quoted context omitted.

> vast majority of us Like 1% or 10%?

No I mean this [0]. Percent of people that live in extreme poverty is plummeting. Or select most other metrics and you will find similar trends (as in >20 year time spans) [0] https://ourworldindata.org/uploads/2013/05/World-Poverty-Sin...

The world population between 1820 and now changed so dramatically, those datapoints are virtually meaningless.

Not to mention, they indicate either 1/2 or 1/4 (depending on who's counting) lived with less than $2 per day. Not exactly something to celebrate.

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