Split the Pie
Barry Nalebuff · 2022
"Fairness in negotiation isn't dividing based on who has more leverage or a bigger existing pie — game theory shows the value created jointly by a deal should be split equally, regardless of each side's size or starting power."
A Yale game theorist and Trivial Pursuit co-creator built a negotiation framework on one reframe: stop asking 'how much of my pie do I keep,' and start asking 'how much new pie did this deal create, and who actually made that possible.'
Nalebuff's 'pie' is the additional value created specifically by the deal happening — the gain over each side's next-best alternative (their BATNA). His game-theoretic claim, following the Nash bargaining solution, is that this pie should be split 50/50 between the two parties whose joint agreement created it, because neither side could have generated that specific surplus alone — even if one party is a giant corporation and the other a single supplier. Size and pre-existing leverage matter for the size of each party's BATNA (which sets the baseline), but once the baseline is set, the incremental value from cooperating belongs equally to both parties who made the cooperation possible. This directly contradicts the common instinct to split proportionally by company size or negotiating power.
Why does Nalebuff argue the pie — the value created specifically by the deal — should be split equally, even between parties of very different size?
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The explanation above is written with AI assistance. These are the originals — go to them to check it.
- Split the Pie: A Radical New Way to NegotiateHarperCollins
You Can Negotiate Anything
"Every negotiation, no matter how it's dressed up, runs on just three variables — power, time, and information — and whoever understands them best usually wins, regardless of who seems to hold the stronger position."