Fixed pie assumption

The fixed pie assumption is a concept in economic negotiation and trade that imagines resources or value as a limited “pie.” It suggests that when two parties bargain over how to share this pie, the total amount available doesn’t increase or decrease; it remains constant. So, whenever one party gains a larger share, the other’s share necessarily shrinks. This perspective simplifies analysis but ignores the possibility of creating additional value or expanding the “pie” through cooperation or innovation, which can lead to more mutually beneficial outcomes.