New Haven, Connecticut, is not just home to Yale University; it’s also a battleground for pizza supremacy, with Sally’s and Pepe’s leading the charge. The lines snaking out the door suggest getting a clam pie from either might be tougher than getting into Yale itself! Let’s imagine Alice and Bob are lucky enough to score a 12-slice clam pizza from Pepe’s, but there’s a catch: they must agree on How To Divide it. If they can’t, Pepe’s will still give them half a pie, but with an uneven split – Alice gets four slices, and Bob only two.
There’s a clear incentive to cooperate and reach an agreement. The tricky part is that numerous divisions could work, some favoring Alice, others Bob. How should they decide how to divide this pizza? Most people instinctively lean on one of two common negotiation perspectives.
The first is the power perspective. Alice has a stronger fallback position – four slices compared to Bob’s two. This viewpoint suggests she should leverage this power to claim a larger share, perhaps twice as much as Bob, resulting in an 8-4 split.
The second is the fairness perspective. Here, the focus shifts to an equal outcome. Alice and Bob might simply decide to divide the pizza in half, each receiving six slices. This seems equitable on the surface.
However, there’s a more logical—and often overlooked—way to divide the pizza, and indeed, anything in a negotiation. This approach centers on what the negotiation is truly about: the extra value created by reaching an agreement. Without a deal, Alice and Bob get a combined 4 + 2 = 6 slices. With a deal, they get 12. The real prize is the additional 6 slices that materialize when they cooperate. This “increase” of 6 slices is what’s at stake – what we can call the “negotiation pie.”
Both Alice and Bob are equally essential to unlock these 6 extra slices. Given their equal roles in creating this value, it makes logical sense to split this negotiation pie equally. Then, each person adds their fallback option to their share of the negotiation pie. This leads to a division of 4 (Alice’s fallback) + 3 (half the negotiation pie) = 7 slices for Alice, and 2 (Bob’s fallback) + 3 (half the negotiation pie) = 5 slices for Bob.
It might seem surprising, but many negotiators get lost focusing on the wrong “pie.” They argue over how to divide the entire 12-slice pizza, not the crucial 6-slice increment. They fixate on the total, missing the point of the negotiation pie. This concept, though seemingly obvious once pointed out, is often hidden in plain sight. Framing negotiations around this “negotiation pie” leads to the logical conclusion: the extra value created should be divided fairly. That’s the idea we need to embrace, and then learn how to convince others to see it too.
First, let’s address the flaws in the common status quo approaches. The power perspective mistakenly conflates power outside the negotiation with power within it. Why should the final division mirror the ratio of their fallback options? The pizza slices aren’t negotiating; Alice and Bob are. While an 8:4 split might superficially resemble the 4:2 fallback ratio, there’s no inherent justification for basing the outcome on these external alternatives.
The argument that Bob is in a weaker position because his fallback is only 2 slices misses the essence of negotiation. Without a deal, Alice gains nothing beyond her 4 slices, and Bob nothing beyond his 2. Effective negotiation is about improving upon your fallback. To realize the extra 6 slices, both Alice and Bob are equally necessary, making them equally powerful within this negotiation.
The fairness perspective, advocating for a simple 6:6 split of the total pizza, also falls short. It’s an oversimplified view of fairness. Alice and Bob aren’t in identical positions due to their different fallbacks. If a 6:6 split were truly universally fair, it should hold true regardless of fallback options. But it doesn’t. Imagine Alice’s fallback jumps to 7 slices, while Bob’s stays at 2. Should the division still be 6:6? No. Alice would rationally reject 6 slices, preferring her guaranteed 7-slice fallback. While the flaw in a simple equal split might be less apparent with fallbacks of 4 and 2, it becomes clear that dividing the total equally is fundamentally flawed as a general rule of fairness.
Splitting the total is a common error. Research by Nejat Anbarci and Nick Feltovich demonstrated this mistake in action. In their experiment, participants with randomly assigned fallbacks negotiated a division. When both fallbacks were 6 slices or less, they split the total in half 42% of the time. It feels fair, and neither party gains by walking away. However, when one fallback rose to 7 or more slices, equal division of the total plummeted to less than 8% of the time.
The issue is that negotiators often grasp for a seemingly “fair” solution without understanding the real negotiation dynamic. They haven’t learned to identify the relevant “negotiation pie,” which in this case is 12 – (4 + 2) = 6 slices. Instead of dividing these 6 extra slices fairly, they mistakenly try to divide the entire 12 slices. Fairness is important, but it must be applied to the negotiation pie, not the total. When considering the 6 extra slices, Alice and Bob are perfectly symmetrical, equally positioned, and equally essential. Dividing this negotiation pie equally is the truly fair approach.
Using the negotiation pie perspective, the 6-slice pie is split 3 and 3. Each person receives their fallback plus their share of the pie. Thus, Alice gets 4 + 3 = 7 slices, and Bob gets 2 + 3 = 5 slices.
Dividing the negotiation pie isn’t just about fairness; it reflects the equal power dynamic within the negotiation. If Alice refuses the proposed split, the negotiation pie vanishes. The same holds true for Bob. Neither party contributes more than the other to creating this 6-slice value increase. Inside the negotiation, focused on generating value beyond the starting point, both parties are entirely symmetrical. Their different fallback options represent power dynamics outside this specific negotiation, which are irrelevant to how to divide the value they create together.
Now you know the secret. It might seem deceptively simple in the pizza scenario, especially in hindsight. But this seemingly simple example underpins a powerful approach applicable to far more complex real-world negotiations.
Thanks for reading.
