Zero-sum bias: meaning of zero-sum thinking and zero-sum game

Introduction

Two furniture stores on the same street. Intuitively, you think: they are picking off each other's customers. Yet the opposite happens. Shopping malls, restaurants and car dealers working in clusters attract more customers together than they would individually. Customers deliberately come to a place where they can compare and choose. Total sales grow, not in spite of but because of the proximity of competitors.

This insight counters one of the most persistent fallacies in entrepreneurship: zero-sum thinking. The belief that what one person gains, another loses. In some situations, this is true. In most entrepreneurial situations, it's not. Yet this bias affects your marketing, pricing, negotiations, collaborations and internal organization, often without you realizing it.

In this article you will read what exactly zero-sum thinking is, where to recognize it, why entrepreneurs fall into it, and how to turn it around to strategies that actually bring you growth.

What does zero-sum mean?

Zero-sum is a concept from game theory and literally means: the sum is zero. If one party wins something, the other loses exactly the same amount. The total does not change.

The Dutch translation is zero-sum. You also come across the term zero-sum game, with the same meaning. In English, you see the spellings zero sum, zero-sum and zerosum used interchangeably.

Classic examples of zero-sum situations: a tennis match, a fixed-stakes poker pot, a game of chess. There is one winner and one loser; the total is zero. Similarly, an auction with one buyer is zero-sum: every euro the seller receives more is one euro the buyer pays extra.

In business, you encounter true zero-sum situations far less often than people think. That very distinction is crucial because it determines which strategy is wise.

What is zero-sum thinking?

Zero-sum thinking is the tendency to interpret situations as if the total value is fixed. You assume that any gain by another automatically comes at your expense.

Pay close attention to the difference with zero-sum itself. Zero-sum describes a property of a situation (the pie is really fixed), while zero-sum thinking describes how someone interprets a situation (I assume the pie is fixed, regardless of whether that is true). The two can exist separately.

Research in 37 countries shows that people who believe more strongly in a zero-sum world are more likely to feel distrust toward others and less likely to cooperate (Rozycka-Tran, Boski & Wojciszke, 2015). The pattern is universal, but more pronounced in societies with more economic uncertainty.

For entrepreneurs, this is relevant because zero-sum thinking often happens unconsciously. You only notice it when you see the consequences: dropped collaborations, difficult negotiations, employees working against each other instead of with each other.

What is a zero-sum game (zero-sum game)?

A zero-sum game or zero-sum game is a formal concept from game theory, introduced by John von Neumann and Oskar Morgenstern in Theory of Games and Economic Behavior (1944). In a zero-sum game, the total outcome is always zero: if one player gets plus ten, the other gets minus ten.

Typical zero-sum games:

• Board games such as chess, checkers and go
• Fixed-pot card games such as poker and bridge
• Sports competitions with exactly one winner
• Futures trading between two opposing parties
• Political elections with a fixed number of seats

In practice, pure zero-sum games are scarce outside of sports and games. Most negotiations, markets and relationships contain elements that can make the cake bigger or smaller. That makes them non-zero-sum.

The distinction is crucial: If you treat a non-zero-sum situation as a zero-sum game, then you are missing out on value. That's exactly what zero-sum bias is about.

What is the zero-sum bias?

Zero-sum bias is a cognitive error in which you mistakenly interpret a situation as zero-sum, when in reality there is room for shared gain (Meegan, 2010).

It is a predictable pattern of thinking, not a random error of judgment. Research shows that even in situations with clearly unlimited resources, people tend to think that one person's gain comes at the expense of another. That bias affects decisions in marketing, pricing, personnel management, negotiation and strategic choices.

A concrete example: a restaurant owner refuses to share his preparation process in a trade magazine for fear that competitors will copy it. In reality, this openness usually increases his authority, generates publicity and attracts new customers who come specifically for him. The bias lies in the assumption that knowledge sharing automatically means loss, when in fact it often yields growth.

Zero-sum bias does not stand alone. It is related to other thinking errors such as loss aversion and cognitive dissonance, and to the broader category of cognitive biases.

What is the difference between a zero-sum game and zero-sum bias?

A zero-sum game describes a type of situation: a context in which total value is fixed. Zero-sum bias describes an error in thinking: the pattern in which you think of a situation as zero-sum, regardless of whether that is actually true.

Briefly:

• Zero-sum game = property of the situation
• Zero-sum bias = misinterpretation of the situation

You can be in a zero-sum game without bias (then your estimate is simply correct). You can also have bias without the situation being zero-sum (then your estimate is not correct). The difference matters for your reaction. In a truly zero-sum game, you have to play tactically sharp to win. In a situation that you only see as zero-sum, you miss opportunities because of the bias.

Why do entrepreneurs fall into zero-sum thinking?

Multiple causes reinforce each other.

Evolutionarily speaking, zero-sum thinking was functional for a long time. Indeed, in times of scarcity, food for some meant no food for others. Our brains were formed in a context where competition for scarce resources was the norm (Rubin, 2002). That pattern is still built in, even now that most situations no longer require it.

In addition, several contemporary factors encourage zero-sum thinking:

• Rankings and market share figures suggest that the market has a fixed size
• Sales targets and KPIs are often set individually, turning colleagues into internal competitors
• Media regularly frames business as a battle with winners and losers
• Negative experiences (a lost customer, a failed deal) linger emotionally and confirm the image
• Under time pressure and stress, we fall back on intuitive judgments, and zero-sum is an intuitively appealing judgment

The result: you see threat where opportunity can be, and loss where growth is possible.

Examples of zero-sum thinking in practice

Six situations in which SME entrepreneurs often fall into zero-sum thinking, and what you can do instead.

Competition and market share

A new competitor opens a business in the same city. The zero-sum reaction is, "this is going to cost me customers." The numbers often tell a different story.

The cluster effect from the intro applies not only physically, but also digitally. When Slack emerged, the market for business team communication grew for everyone, including Microsoft Teams and Google Chat. When Uber entered the cab market, the overall mobility market grew: people who rarely took a cab before now began to do so. New players often activate latent demand rather than distributing existing demand.

Before you label a competitor as a threat, ask the question: is this market really limited, or is it getting bigger because of more players? In most growing or still underdeveloped categories, the latter is the case. And even in more stable markets, competition often broadens the category more than it divides it.

Marketing and advertising budget

Many entrepreneurs think, "every euro competitor X spends on Google Ads, I lose in more expensive clicks." This is true in a narrow, depleted search space, but almost never in broader campaigns.

You can also create new search demand and new attention. With content marketing, via LinkedIn, YouTube or PR. Those who assume a fixed amount of clicks are playing in a zero-sum game that they themselves have invented.

There is another pitfall. Research by Chernev (2007) shows that consumers find companies that claim to be good at everything less credible than those that choose sharply. By making conscious choices in your marketing (one strong advantage, clearly positioned) you leave something out, but gain in persuasiveness. Claiming more is counterproductive. This is an important insight for your positioning, which we will return to later in the article.

Sales and negotiations

In a negotiation, any price reduction feels like a loss. The customer wants a discount; you want to keep your margin. Zero-sum, it seems.

But negotiation is rarely just about price. The client often actually wants faster delivery, a longer contract, less risk, extra flexibility or better payment terms. Once you get those underlying interests on the table, options emerge in which both of you gain something. That is the core of the mutual gains approach (Fisher & Ury, 1981).

Specifically, ask not "do you want a discount?" but "what should this deal achieve for you?". You'll often end up with a combination in which you retain more margin and the customer gets more value than a simple price reduction would give.

Pricing and premium packages

Research on premium subscriptions shows a clear pattern: the stronger customers see the relationship between basic and premium as zero-sum, the less likely they are to choose the premium variant (Hagerty, Thompson & Barasz, 2021). This is because they believe that the premium package exists only because something has been scrapped from the basic package.

The solution lies in framing. Position your premium package as an extension of basic, not as the full version of which basic is a stripped-down version. Specifically, "everything from basic, plus X, Y and Z" works better than "basic lacks what premium does have."

For your pricing strategy and conversion rate, this is a direct revenue driver. You can read more in-depth on this in our CRO offering.

Collaboration with partners or competitors

Two agencies in the same niche may see each other as competitors or as potential partners. Zero-sum thinking says: a deal for them is no deal for us. In practice, collaboration often works better than isolation.

For example, Tasmanic partners with specialty agencies for components outside our core services. Both parties maintain their focus, but together offer clients a more complete whole. This pattern is called coopetition: cooperate where we can, compete where we must (Brandenburger & Nalebuff, 1996).

The more useful question is not "is this a competitor?" but "where can we make the market bigger together?".

Personnel and organization

Zero-sum thinking also plays out internally. Sales and marketing blaming each other for disappointing results. Departments competing for budget instead of working together for a bigger result. Bonus structures in which one employee can only win if the other loses.

The counter spice is shared ownership: KPIs that touch multiple teams, bonuses calculated on team results, and management conversations that discuss joint contribution rather than mutual ranking. This shifts the focus from "I need to win over my colleague" to "We need to create more value together."

When is something zero-sum and when is it non-zero-sum?

Not every situation is a shared-profit situation. Sometimes the cake really is set. Making the distinction is crucial because the right strategy depends on it completely.

In a true zero-sum situation, working together is pointless and you have to play sharp. In a non-zero-sum situation, cooperating is actually the win. The damage caused by zero-sum thinking almost always comes from non-zero-sum situations that are wrongly treated as zero-sum.

Positive-sum is a variant of non-zero-sum in which both parties have a net gain. Trade, knowledge sharing and good partnerships often fall into this category. Robert Wright argues in Nonzero (1999) that human progress is largely about moving from zero-sum to positive-sum arrangements: from robbery to trade, from war to cooperation, from foreclosure to knowledge sharing.

Rule of thumb for entrepreneurs: don't assume zero-sum by default. Assume non-zero-sum by default, and only check whether the situation is really zero-sum before you play that scenario.

How do you avoid zero-sum thinking as an entrepreneur?

Five concrete questions to ask when making strategic decisions, negotiations and everyday choices.

Question whether the market is fixed or can grow

Before reacting to a new competitor or a changing market, ask the question: will this market get bigger, smaller or stay the same? In a growing market, a new player is rarely an immediate threat, more often market validation. In a shrinking market, any new player is. Most SME markets grow or shift, they do not shrink.

Look at value creation before value distribution

Before you decide who gets what, ask the question: how can we make something more valuable together? In negotiations, collaborations or team dynamics, this means first investing time in understanding each other's interests and capabilities, and only then dividing. Often the pie turns out to be bigger than it first seemed.

Look for scenarios in which both parties win

Make it explicit. What scenarios are conceivable in which you and the other party would be better off than they are now? Write down three or four. Even if you end up choosing a different solution, you have broken the zero-sum frame. This exercise works particularly well in price negotiations, partner discussions and strategic decision-making.

Distinguish between short-term and long-term

A deal may seem zero-sum in the short term and be positive-sum in the long term. A customer who pays little now may become your biggest ambassador two years from now. A partner who buys from you now may self-refer later. Zero-sum thinking is almost always short-term thinking disguised as realism.

Test assumptions with data

Zero-sum thinking is often based on feelings, not facts. Test the assumption: did my sales really drop when competitor X entered the market? How many customers would I really lose if I enter into this partnership? What do the numbers say? Often feelings turn out to be exaggerated. A good marketing dashboard helps to quickly test these kinds of assumptions instead of relying on them.

Zero-sum bias in marketing and positioning

In marketing, zero-sum bias operates on three levels: in how you yourself view the market, in how customers interpret your offerings, and in how your brand is perceived against competitors.

Level 1: Your own market view. Entrepreneurs who think in zero-sum often conduct defensive marketing: "the competitor says this, so we say that harder." The result is a market in which everyone looks alike and no one is truly distinctive. Positioning then becomes reaction rather than choice.

Level 2: Customer perceptions. As discussed earlier, customers often see premium offerings as zero-sum. They think premium exists only because basic is missing something. You see the same thing in product comparisons, where consumers intuitively weigh benefits of options A and B against each other rather than assessing the overall proposition.

Level 3: Claims in your communications. Many companies want to win on all fronts: cheaper and faster and better and more personal. Consumers intuitively see through this (Chernev, 2007). By consciously choosing what you really excel in, and openly acknowledging what you do not compete in, you become more credible. That is the core of sharp positioning.

So those who understand zero-sum bias use it not only as a trap, but also as a tool. Customers believe more easily if you don't promise everything. That sounds counterintuitive, and exactly therein lies the power for your brand strategy and content strategy.

Frequently asked questions about zero-sum thinking

Is zero-sum thinking always bad?

No. In situations that are truly zero-sum (a chess game, an auction with one winner, an appointment for one position) zero-sum thinking is exactly what is required of you. It only becomes problematic when you apply it to situations where cooperation or growth is possible. The skill is in knowing when to apply which mindset.

What does positive-sum mean?

Positive-sum means that the overall result increases when parties work together. The pie grows. Trade, knowledge sharing and partnerships are classic positive-sum examples. Robert Wright in Nonzero (1999) describes how human societies have historically developed by creating more and more positive-sum structures.

What is a non-zero-sum game?

A non-zero-sum game is a situation in which the overall outcome is not fixed. Both players can win together, lose together or come out unequal. Most real-world situations (negotiations, partnerships, market interaction) are non-zero-sum, even though they often don't feel that way.

What is the difference between zero-sum and non-zero-sum?

In a zero-sum situation, the total value is fixed: profit for one is loss for another. In a non-zero-sum situation, that total value can grow or shrink, depending on what parties do. That difference determines whether competition or cooperation is the smartest strategy.

What is an example of zero-sum bias?

An entrepreneur refuses to cooperate with an industry peer for fear that the other will only benefit. In reality, collaboration would have given both companies access to a larger customer base. The bias is in the assumption that the other can only win if you lose.

Why is zero-sum thinking dangerous for entrepreneurs?

It excludes opportunities. You miss out on collaborations, turn potential partners into competitors, and miss out on growth that is only possible with shared effort. It also increases stress and complicates negotiations because every move feels like a loss rather than an investment.

Conclusion

Zero-sum thinking is an evolutionarily understandable pattern that does more harm than good in modern entrepreneurial practice. In the vast majority of situations, cooperation is possible and growth is available, provided you are willing to look beyond the intuitive response.

Recognize the pitfalls in your competitive thinking, your negotiation approach, your pricing, your collaborations and your internal organization. Ask in every strategic decision: is this really zero-sum, or am I unfairly treating a non-zero-sum situation as one? And in your marketing and positioning: dare to choose instead of claiming to excel at everything.

Want to set up your online marketing in such a way that you create growth instead of mainly reacting to competitors? Feel free to make an appointment.

Resources

Brandenburger, A. & Nalebuff, B. J. (1996). "Co-opetition." Doubleday.

Chernev, A. (2007). "Jack of All Trades or Master of One? Product Differentiation and Compensatory Reasoning in Consumer Choice." Journal of Consumer Research, 33(4), 430 to 444.

Fisher, R. & Ury, W. (1981). "Getting to Yes: Negotiating Agreement Without Giving In." Houghton Mifflin.

Hagerty, S. F., Thompson, D. V. & Barasz, K. (2021). "Zero-Sum Perceptions Reduce Acceptability of Premium Offerings." University of Toronto.

Meegan, D. V. (2010). "Zero-sum bias: perceived competition despite unlimited resources." Frontiers in Psychology, 1, 191.

Rozycka-Tran, J., Boski, P. & Wojciszke, B. (2015). "Belief in a Zero-Sum Game as a Social Axiom: A 37-Nation Study." Journal of Cross-Cultural Psychology, 46(4), 525 to 548.

Rubin, P. (2002). "Darwinian Politics: The Evolutionary Origin of Freedom." Rutgers University Press.

Von Neumann, J. & Morgenstern, O. (1944). "Theory of Games and Economic Behavior." Princeton University Press.

Wright, R. (1999). "Nonzero: The Logic of Human Destiny." Pantheon Books.