What if We’re Playing the Wrong Game?

David Good and Patricia Andrews Fearon 

Since von Neumann and Morgenstern’s seminal work Theory of Games and Economic Behavior and Nash’s famous equilibrium concept, game theory has offered invaluable insights into strategic decision-making for public policy and international relations. Game theory seems to offer an alluring promise: that for every finite game, there is an ideal strategy.

It is tempting to think that all that stops us from predicting human behavior is the simple failure of humans to be fully rational. We may even go one step further and try to build these shortcomings – irrationality, heuristics or even imperfect knowledge – into our predictive models. However, it is possible that the challenge is more fundamental.

What if players are not just making errors in strategy, but rather, playing the entirely wrong game? We can be smug about apparent miscalculations or irrational decisions of others, while being surprisingly incurious about the very basic beliefs those others hold about what kind of “game” they believe they are playing, or put differently, how they think the world works.

As part of the Social Macroeconomic Research Hub of Rebuilding Macroeconomics, we will be taking a deeper look into the phenomenon of a zero-sum mindset. In a zero-sum game, all gains and losses must sum to zero. Therefore, a gain for one party must always be at the expense of the other party. In this kind of game, mutual gain and mutual destruction are impossible. The best outcome for oneself is earned in exact proportion to the harm inflicted upon the other.

Many of strategies and behaviors might be perfectly rational within the context of the perceived game. For example, the hostility of a shopkeeper towards a customer trying to return a purchase may be self-sabotaging in the broader context of building a repeated customer base and reputation but it would be perfectly rational if the shopkeeper perceives this as a two-player zero-sum game.

However, the very assumptions and constraints that make a simple zero-sum game open to a prescribed solution also constrain the insights of the game to only the narrowest of situations. Indeed, a truly zero-sum game is quite rare in lived reality. This is why game theorists have developed countless other cooperative and noncooperative non-zero-sum games with ever-increasing complexity to attempt to better approximate real-world decision-making situations.

Yet, our preliminary data suggests that for many people, the concept of a zero-sum game is not constrained to narrowly defined situations. Rather it is considered a metaphor for life. Indeed, we find that those high in zero-sum mindset, that is, a generalized belief that life is like a zero-sum game, demonstrate differences in perceptions, preferences and behaviors that align rationally with interpreting and playing zero-sum game strategies.

Those who are high in a zero-sum mindset are more likely to perceive hostility in ambiguous situations, prefer competition over cooperation, dominance over egalitarianism, and support aggressive behavior towards political outgroups. They are less likely to perceive the possibility of mutual gains. At an individual level, one wonders whether Adam Smith’s simple pin factory could ever lead to tolerable efficiency if everyone had a high zero-sum mindset.

The situation is only made worse in zero-sum games between groups and towards the meso and macro levels of the economy. In groups the morality of the collective can make cooperation into treason and hostility into heroism. Division and fragmentation undermine social and economic cooperation.

Frankly, it’s not hard to see the cognitive appeal of zero-sum thinking. It accords well with lived experiences of competition over scarce resources (i.e. a fixed pie – a bigger slice for you means a smaller slice for me). It seems to promise the possibility of a “solution” for winning, and it offers a comprehensible equilibrium in social and economic interactions. Not to mention, it has just enough cynicism so as to be easily confused with realism.

On the other hand, the many assumptions that must be maintained to hold a zero-sum mindset (for example, that “success” can be reduced to acquisition of a single commodity that is both fixed and scarce) could be compromised at every turn. How are these mindsets developed and maintained? What is the nature and structure of these component beliefs and assumptions? Can they be changed? Can aligning our perception of the  “game” we’re playing also help us align our cooperative efforts towards more productive policies and economies?

Our research project with Rebuilding Macroeconomics, will take a deeper look at the phenomenon of zero-sum mindset—mapping its prevalence and role in social, political and macroeconomic outcomes. We will explore approaches to intervention and measure impact. We hope to provide fresh insights into a previously ignored barrier to social and economic cooperation: the zero-sum mindset, and to develop and test strategies for overcoming it.