Saturday, March 8, 2014

Some games ARE zero-sum games

Mark Thoma featured an NYT commentary by Harvard economist, Sendhil Mullainathan, which Mark described as not his favorite article of the day. In the commentary, Mullainathan mused, "we shouldn't let these arguments serve as handmaidens to our emotional outrage — or to a misguided belief that the economy is a zero-sum game."

"The economy" may or may not be a zero-sum game. It really depends on what scale it's being evaluated. Cosmically speaking, the first law of thermodynamics rules out perpetual motion machines. But even if we assume that at a more mundane scale the economy is a non zero-sum game that doesn't mean that none of its component parts may be zero-sum games. That would be a fallacy of division.
" is fallacious to conclude (distributively) that each or every member of a class has a property from the premise that the class (collectively) has that property. Thus, the whole class collectively may be [non zero-sum], but a part of that class may not necessarily have that property -- i.e., may not be [non zero- sum]."

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