Monday, June 15, 2009

60/40 split

Tim Harford recounts in his book The Logic of Life an anecdote about the authors of Freakonomics, Steven D. Levitt and Stephen J. Dubner: when discussing the terms of their collaboration for writing the book, Levitt stated that he wouldn't go for less than a 60/40 split on revenues; Dubner, on the other hand, would settle for no less than 60/40 either. The apparent confrontation vanished when they realized that each was meaning the other to get 60%, so they decided to join the venture.

Charming as it may sound, this story cannot be true: if I'm settling for 40% of the revenues and my partner proposes a 60/40 split, the proposal immediately fits my goals no matter whom I assume will get each part of the split.