Wednesday, 6 August 2008

Games people play

Essentially, there are 3 types of games people can play. These are:

1. Positive sum games
2. Negative sum games
3. Zero sum games

In positive sum games, the odds of winning are high and there are many winners.

In negative sum games, the odds of losing are high and there are many losers.

In zero sum games, the odds of winning equal those of losing, the winners are at the expense of the losers.

It is important to choose the games one wishes to play. It is very important to know the types of games one chooses to play in.

To win, choose the one in the category of the positive sum game.

Avoid playing in those negative sum games. For those wishing to "win" (try their luck or gamble) in negative sum games, their best chance of coming out the "winner" is probably just to place ONE bet with the amount they can afford to risk and hope for a lucky win. To be engaged in such a negative sum game over many bets will surely mean ending the loser.

What about zero sum games? How to be the winner here? Often, the player with the most capital wins in the long run. This is because the player maybe struck with a string of bad luck and the player with the least capital may be out of capital earlier than the player with more capital.

To be a winner, choose the games one wishes to play in carefully. Investing is likewise not dissimilar. One need to have the investing knowledge before "playing this game" intelligently, lest one ends up not winning but losing.

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