In 1944 von Neumann and Morgenstern published the foundational text of game theory. The minimax theorem — von Neumann's central result — proved that in zero-sum games, there exists an optimal strategy that minimises the maximum possible loss. This transformed economics from a study of isolated decisions into a study of strategic interaction between agents with competing interests.
Von Neumann and Morgenstern axiomatised expected utility theory, providing the formal foundation for rational decision-making under uncertainty. Their axioms define what it means to be a rational agent: complete preferences, transitivity, continuity, and independence. Any agent satisfying these axioms must act as if maximising expected utility — making expected utility not just a useful model but a logical necessity.
Financial markets are multi-player games of incomplete information. Every trade has a counterparty. Every signal can be anticipated. Von Neumann's framework forces us to think strategically: not just 'what is this asset worth?' but 'what do other participants know, and how will they react?' This adversarial reasoning is essential in markets where alpha decays as more participants discover the same signals.
We model markets as strategic games. Our scoring engine considers not just whether a signal exists but whether it is already priced — whether the counterparty knows what we know. Von Neumann's game theory is the framework for reasoning about edge in adversarial environments.