fair game

Definition

Situation of conflict or competition where all participants are expected to break even over the long run, and where all odds and payoffs occur according to the laws of probability and not by external intervention. It is a zero-sum game (where one's gain is others' loss) since every player must only break even over a period. In investing, it is a situation without a risk premium and therefore without an opportunity to use market information to gain a higher than normal return (higher than what is consistent with the inherent risk). Risk-averse investors avoid fair game situations because they get higher payoffs (utility) from a return that is assured - even though it is the same as the fair game return.

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