How to Use Private Information in a Multi-person Zero-sum Game

Abstract

This paper describes how people play a zero sum game with different private information. Apparently more informed players earn more than less informed players do. What happens however if people buy and sell speculatively in the future market? Those who are better informed seem to have greater chance to earn money, while those who have no information may expect zero profit because they seem to have equal chance to make money (to buy a commodity whose price will increase or to sell a commodity whose price will decrease) and to lose money (to sell a commodity whose price will increase or to buy a commodity whose price will decrease). Yet the sum of all traders is zero. If the most informed player earns profit and the lest informed player expects zero profit, some modestly informed players must suffer loss.

This paper is a shorter version of Yoneda, Masumoto and Oda [2] with some new findings in simulations and experiments but without details in mathematical analysis. The present study is based on the research by the Open Research Centre Project “Experimental Economics: A new method of teaching economics and the research on its impact on society” and Grants-in-aids for Scientific Research 17310029.