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On Zero Sum Games (The Informational Meta-Game)
These are my thoughts on zero sum games. From poker to quant trading. Zero-sum games are fundamentally informational contests. The GTO (unexploitable) strategy is often suboptimal in practice because it is either unimplementable or even unknown and assumes everyone else is playing optimally. The GTO strategy is not maximally exploitative it is minimally exploited. In a game of non-optimal participants, the GTO strategy is not guaranteed to be the one that makes the most money.
To defend against this, sophisticated firms intentionally add entropy to their execution–deliberately randomizing parameters, switching between multiple strategies, or even taking occasional unprofitable trades. These entropy inducing behaviors are a pure cost in isolation, but they serve to obscure the true underlying strategy and make reverse engineering dramatically more difficult. Consider table image in poker: A player might intentionally play loose and aggressive with weak hands early in a session, creating a reputation for reckless behavior.
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