Chips are not money. You cannot cash a chip lead, and the second half of a chip stack is always worth less than the first — which is why the leader owns half the chips and nowhere near half the prize pool.
Enter the stacks and the payouts. It gives each player's share of the money, which is the number a deal should be struck at.
Doubling from 50,000 to 100,000 cannot double your prize, because first place is capped. Losing 50,000 and busting costs you everything. The upside is bounded and the downside is not, so every chip you add is worth slightly less than the last.
A call that is break-even in chips is losing in money, which is why good players fold hands at a final table that they would snap-call in a cash game. The short stacks are being paid to survive; the big stack is being paid to apply pressure without ever gambling.
When a final table wants to chop, ICM is the fair starting point — it is what the stacks are worth if everyone played on perfectly. Many deals then shade a few percent toward the chip leader to reflect skill or the fact that they hold the hammer. Agree the method before you agree the numbers.
Independent Chip Model. It converts tournament chip stacks into the share of the prize pool they represent.
The arithmetic is exact, but the model assumes every player is equally skilled and that stack size alone decides outcomes. It ignores position, blind level and ability.
If you are the best player left, an even ICM chop gives away your edge. If you are short and tired, it is usually the best offer you will get.