Wealth creation in zero sum games

In a zero sum game like poker, everyone who plays is on average a net loser, due to the rake. Those who overcome the rake and their opponents to become winners must always be the minority, in the end, even though there could concievably be nine winners and one loser at any given table. However, it seems to me that there are a couple of things that players can do to raise EV for EVERYONE, and these actions have corollaries in the stock
market. because they can make poker seem a non-zero sum game for a time.

the first thing to recognize is that the rake is an inefficiency in the game that causes loss of wealth to all players. Inefficiencies can be corrected with technology in the market, and similarly in poker. Given a time charge, installing a properly working shuffler will raise everyone's EV, just as the invention of the cotton gin raised EV in the stock market.

For a short time at least, poker is now a non zero sum game, because a shuffler means quicker hands, which means more hands per half-hour per charge, and a higher expected earn. However, when the inefficiency is corrected, poker goes back to zero-sum.

The same may be also true with the stock market. Wealth is "created" at the moment due to increasing efficiency in production and implementation. However, in a closed system(poker table, earth) there is a limit to the creation of wealth.

In fact, both the poker table and stock maket may start out as worse than zero sum, and "create wealth" only until it reaches zero sum. think of the corallary between rake in a poker game and fees in a mutual fund. On average, when fees or rake go to zero, the poker player earns according to skill, and the mutual fund earns the market return.

there are some internal inconsistencies here which I'm sure you can see, but nevertheless it is interesting.

[JohnnyHumongous]

Wealth may not be created in the zero-sum game of poker but utility is. The expected utility of a losing player gamboooling his $1000 at 10/20 is generally greater than if he had that $1000 in his pocket. If his EV after 4 hours of playing 10/20 with that $1000 is say $800 that means he expects to lose 2.5BB per hour. However, the fun, entertainment and enjoyment he gets is worth more than the $200 he expects to be down.

There is almost always a direct correlation between how much "fun" a table appears to be having and how soft or profitable it is. Think about that.

The point is that wealth can be created in zero sum games, if viewed from the short term. The question is whether the stock market behaves in a similar manner, or if there are some fundemental differences.

[hedgeyerbets]

the stock market isn't zero sum. a better analogy would be to trading options (though even the options market theoretically should create wealth at the risk free rate)

Please explain why you believe the stock market is not zero sum over the long term. Is it because you think it has infinite room to expand?

[hedgeyerbets]

Not necessarily infinite, but yes they have a lot of room to expand. Think about it. Any increase in technology/productivity increase the amount of wealth that can be created for a given amount of money. So in the long run the stock market generates value, because shares of stock represent ownership of a company. And the value of companies in general will increase over time for the previously stated reason (there are others, as well).

[SheetWise]

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Please explain why you believe the stock market is not zero sum over the long term. Is it because you think it has infinite room to expand?

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It is not zero sum because the sum total can change. Everyone can win -or- everyone can lose. That can't happen in poker.

[Brainwalter]

Installing a shuffler doesn't improve the players' collective EV, it makes their -EV worse because the house is raking more often.

[SheetWise]

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In a zero sum game like poker ...

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Poker is a negative sum game, if there is a rake.

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Given a time charge, installing a properly working shuffler will raise everyone's EV ...

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It will lower the commission, that's all.

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On average, when fees or rake go to zero, the poker player earns according to skill...

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They never go to zero, they can only approach zero.

[SheetWise]

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Installing a shuffler doesn't improve the players' collective EV, it makes their -EV worse because the house is raking more often.

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The OP said "Given a time charge, installing a properly working shuffler will raise everyone's EV..."