Let's try to take this approach and apply it to a simple case. Late one Sunday afternoon, I was heading back to New Haven after seeing a show in the Lincoln Center in New York. I had hired a car service to take me back. The service, tip included, cost $150. But that was well worth it to me. Indeed, I would have been willing to pay all the way up to $200 dollars for the convenience of getting back directly. As I'm heading to the car, I run into one of my colleagues, and I quickly figure out that this friend had seen the show and was also heading back to New Haven. So, I could offer the person a ride, there's plenty of room in the car. All we had to do was agree how much he would pay me for the ride. Here's a bit of background. If he didn't take the car service then what he was going to do would take a taxi to Grand Central, tTake Metro-North Train from Grand Central to New Haven, and a taxi back to his house. And all of that would cost $40, okay? So that's what the result will be, if we don't reach an agreement. What should we do? Well, here are some options. We could split the $150 cost, so he pays me $75. He could just give me the cost of the train fare and taxis were $40. We could split the $40 and he could give me 20 or he could just come in for free and I could be a gentleman. What do you think is the right answer here? My view is, we should look at this in the context of, what is the pie? And in the story I've told you, the pie is $40. If we don't reach an agreement I'll pay $150, he'll pay $40 so together we'll pay $190. If we do reach an agreement, the total cost will be $150. So by working together, we can save $40. And that means I think that the right amount he should pay me is $20. Now the way I've told you the story has left out some important details. In particular the ride in the car, is more comfortable and quicker than the train. And so, he'd be willing to pay more then $40, to join me in the car. Since we're colleagues, and all the cards are on the table, both of us are acting in an non-strategic fashion. And so he's totally up front about the fact that he's be willing to pay all the way up to $100, to join me in the car. There's also the value that I would get from his company and his value from my company. But let's just call that a wash and we won't consider it. So his value is $100. In that case, the pie is now $100. And so he should pay me $50. And if he does that, he ends up $50 ahead because he's paid 50 for something worth 100. And I'm $50 ahead because I've gotten $50 to help pay for the cost of the ride. I imagine some of you are thinking, Barry, what a jerk! I mean, just give the guy a ride, right? It doesn't cost you anything. Good karma. So that's a fair point. And if you think it's incumbent on me to say, sure, please, come on in. Be my guest. Then the question is, what should my colleague say in response? Well not just thank you, is my answer. Many people think he should say well okay, let me give you $50. And I think if you believe that I should say come in for free, then I am offering him the entire pie, and by symmetry he should offer me the entire pie. That is, he should say no, Barry. I really appreciate your offer, but this ride is worth $100. So please, let me give you the full $100. So I'm offering him 0, he's asking to pay 100, and in the end, we would settle at the midpoint, at 50 50. So there's two different ways that we could get there. Either we could agree to split the pie, or each of us is collegial fashion, could offer the other side the entire pie and we could meet in the middle. Now this story is based on the true experience of my two colleagues. If you wondered what happened in the real version of this story, my colleague offered the friend the ride for free. He felt a little bit embarrassed about that, and so afterwards he sent her an expensive bottle of wine. The problem is, she doesn't drink wine. And so in the end, it was really a wonderful gesture that was wildly inefficient. It would've been easier and better for both parties if she had taken and he had given the $50.