Wednesday, August 29, 2007

Inefficiency of Splitting the Bill

Have you ever been to a restaurant with a large group of people and split the bill, so everyone pays the same amount? Most of us have; it is common among my friends. Under these circumstances, have you ever been temped to order more than you otherwise might? After all, if you spend an extra $1, you only pay $1 x 1/N (where N is the number of people in your group). Have you seen your friends order things (e.g., one more $10 cocktail, the lobster) you think they wouldn't otherwise when you are splitting the bill? Again, they alone get the benefit of the food and everyone shares in paying for it.

The first person who expressed concern about this to me (in 1998) was Sarah Reber, an economist with excellent economic intuition. Sarah's guess was that this problem was particularly severe for (alcoholic) drinks, and less severe for food. I hadn't given it much thought, but recently found out about this paper by Uri Gneezy, Ernan Haruvy and Hadas Yafe which provides nice evidence that this is a problem. The authors found groups of people going to a restaurant. At the beginning of the meal, they were randomly told that a) they would each pay for their own meal, b) that they would split the total bill equally, or c) that the person running the experiment would pick up the tab. People spent least in (a) when they bore the full cost of ordering more; they spent less in (b) when they bore only some of the cost of ordering more; they spent least in (c) when they bore none of the costs. So people spend more when their friends pick up much of the cost of this extra ordering. They don't take into account the harm they do their friends by ordering more.

The efficient outcome is obtained if everyone pays for themselves, so people bear the full cost of their food (which makes sense given that they also get the full benefit of eating). So why is it so common to split the bill? One answer is that it is easier. It is always hard to figure out each person's share of the tax and tip. Another is that it is awkward to suggest that everyone pays for themselves. If you took the harm you did to your friends by ordering more (when you are splitting the bill) into account when ordering, there would be no problem with splitting the bill. Suggesting that you want everyone to pay for themselves is effectively accusing your friends of not caring about your welfare. Now that's an awkward conversation.

34 comments:

Unknown said...

I find the problem occurs most with appetizers, since those are almost always split between the table even when the rest of the bill isn't being split.

Anonymous said...

sadyCragmadax, clomid online atterfurf, [url=http://www.webjam.com/clomidonline]buy clomid[/url] Arcatajaf
23

Anonymous said...

Nice fill someone in on and this fill someone in on helped me alot in my college assignement. Thanks you seeking your information.

Anonymous said...

TexanyThync, viagra tramadol zithromax carisoprodol buy cialis, piluerryMer

Anonymous said...

estaliBriesty, tramadol cheapest, bealiaVet, cheap tramadol, Hifavamom, order tramadol nex day delivery, dofafforp, byu tramadol online, MatBultapetle

Anonymous said...

Artistically done is well-advised b wealthier than spectacularly said.

Anonymous said...

Splendidly done is sick than spectacularly said.

Anonymous said...

Lovingly done is better than well said.

Anonymous said...

Lovingly done is better than comfortably said.

Anonymous said...

A the huan race who dares to waste one hour of one of these days has not discovered the value of life.

[url=http://www.petforums.co.uk/members/allenpaul.html#vmessage93395]Jane[/url]


Mark

Anonymous said...

A humankind begins scathing his perceptiveness teeth the first time he bites on holiday more than he can chew.

Anonymous said...

Диета.похудеть за 2 недели
Диета камни в поджелудочной железе
Простые доступные диеты

[url=http://sitediethelper.ru/kakoe-horoshee-lekarstvo-dlya-pohudeniya.html]Какое хорошее лекарство для похудения[/url]
[url=http://sitediethelper.ru/dieta-nomer-5-medicinskaya.html]Диета номер 5 медицинская[/url]
[url=http://sitediethelper.ru/gde-kupit-obruch-dlya-pohudeniya-v-nice.html]Где купить обруч для похудения в нице[/url]

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

buy kamagra no rx [url=http://priligyprix.webs.com/#4u0i]priligy pharmacie[/url] [url=http://viagra-prix.webs.com/#1o7g]acheter du viagra[/url] kamagra without prescription UK fst plavix pharmacy no rx zct acheter levitra zithromax vente france cialis generique france cheap drugs for sale aer

Anonymous said...

generic drugs without prescription [url=https://flavors.me/googlegavno#5a9q]kamagra[/url] [url=https://flavors.me/zithromaxhere#5l3s]generic zithromax[/url] cost of drugs tablets hvo plavix without prescription UK adf kamagra pharmacy zithromax online clomid no rx kamagra online cost fan

Anonymous said...

generic drugs without prescription [url=https://flavors.me/googlegavno#5a9q]kamagra[/url] [url=https://flavors.me/zithromaxhere#5l3s]generic zithromax[/url] cost of drugs tablets hvo plavix without prescription UK adf kamagra pharmacy zithromax online clomid no rx kamagra online cost fan

Anonymous said...

cheap drugs no prescription [url=https://flavors.me/stratteranorx#3q1k]strattera tablets[/url] [url=https://flavors.me/googlegavno#2g7i]kamagra no rx[/url] order clomid cost ijh plavix tablets no rx lrn buy zithromax kamagra usa priligy uk clomid tablets dwh

Anonymous said...

clomid no prescription price [url=http://ataraxhere.eklablog.com/#0e3g]atarax no rx[/url] [url=http://priligyhere.eklablog.com/#5e8n]generic priligy[/url] [url=https://flavors.me/sildenafil_citrate_in_connecti#8b3k]buy kamagra online with paypal in Singapore[/url] jmd pom atarax pharmacy purchase kamagra in St Louis purchase kamagra buy priligy kamagra no prescription price rwg

Anonymous said...

clomid no prescription price [url=http://ataraxhere.eklablog.com/#0e3g]atarax no rx[/url] [url=http://priligyhere.eklablog.com/#5e8n]generic priligy[/url] [url=https://flavors.me/sildenafil_citrate_in_connecti#8b3k]buy kamagra online with paypal in Singapore[/url] jmd pom atarax pharmacy purchase kamagra in St Louis purchase kamagra buy priligy kamagra no prescription price rwg

Anonymous said...

how to buy kamagra no rx [url=http://clomidhere.eklablog.com/#7e1e]clomid pharmacy[/url] [url=http://priligyhere.eklablog.com/#5g4v]priligy no rx[/url] [url=https://flavors.me/sildenafil_citrate_in_connecti#4p2v]purchase kamagra in St Louis[/url] qzm qnx atarax no rx kamagra uk serious website selling kamagra order strattera generic priligy pharmacy ddq

Anonymous said...

how to buy kamagra no rx [url=http://clomidhere.eklablog.com/#7e1e]clomid pharmacy[/url] [url=http://priligyhere.eklablog.com/#5g4v]priligy no rx[/url] [url=https://flavors.me/sildenafil_citrate_in_connecti#4p2v]purchase kamagra in St Louis[/url] qzm qnx atarax no rx kamagra uk serious website selling kamagra order strattera generic priligy pharmacy ddq

Anonymous said...

how to buy kamagra no rx [url=http://clomidhere.eklablog.com/#7e1e]clomid pharmacy[/url] [url=http://priligyhere.eklablog.com/#5g4v]priligy no rx[/url] [url=https://flavors.me/sildenafil_citrate_in_connecti#4p2v]purchase kamagra in St Louis[/url] qzm qnx atarax no rx kamagra uk serious website selling kamagra order strattera generic priligy pharmacy ddq

Anonymous said...

drugs pills without prescription [url=https://flavors.me/sildenafil_citrate_in_connecti#5v3x]buying kamagra london in Hamburg[/url] [url=http://kamagra.iwopop.com/#8v1x]kamagra prescription online[/url] [url=http://priligyhere.eklablog.com/#3m3f]priligy for sale[/url] uvy iis priligy for sale purchase kamagra in St Louis generic clomid atarax no prescription how to buy drugs no prescription ukq

Anonymous said...

drugs pills without prescription [url=https://flavors.me/sildenafil_citrate_in_connecti#5v3x]buying kamagra london in Hamburg[/url] [url=http://kamagra.iwopop.com/#8v1x]kamagra prescription online[/url] [url=http://priligyhere.eklablog.com/#3m3f]priligy for sale[/url] uvy iis priligy for sale purchase kamagra in St Louis generic clomid atarax no prescription how to buy drugs no prescription ukq

Anonymous said...

priligy for sale cost [url=http://thezithromaxdrug.mevio.com/#4k1t]zithromax side effects[/url] [url=http://theclomiddrug.mevio.com/#0z7t]clomid cheap[/url] zvb wlm canadian generic strattera sildenafil 100mg zithromax buying where can i buy clomid no rx kmn

Anonymous said...

priligy for sale cost [url=http://thezithromaxdrug.mevio.com/#4k1t]zithromax side effects[/url] [url=http://theclomiddrug.mevio.com/#0z7t]clomid cheap[/url] zvb wlm canadian generic strattera sildenafil 100mg zithromax buying where can i buy clomid no rx kmn

Anonymous said...

problem d erection
[url=http://uroxatral.iwopop.com/]forum troubles de l erection
[/url]
[url=http://uroxatral.iwopop.com/]ou acheter uroxatral en ligne[/url] ou acheter uroxatral comprimes a Chatellerault ou acheter uroxatral comprimes a Chatellerault
[url=http://effervescent.iwopop.com/]kamagra effervescent Vente[/url] kamagra effervescent Jelly 100mg Le Havre Ou Acheter kamagra effervescent
[url=http://dapoxetin.iwopop.com/]dapoxetine price[/url] priligy online generic priligy
pharmacie online



,[url=http://effervescent.iwopop.com/]pharmacie par internet[/url]

Anonymous said...

problem d erection
[url=http://uroxatral.iwopop.com/]forum troubles de l erection
[/url]
[url=http://uroxatral.iwopop.com/]ou acheter uroxatral en ligne[/url] ou acheter uroxatral comprimes a Chatellerault ou acheter uroxatral comprimes a Chatellerault
[url=http://effervescent.iwopop.com/]kamagra effervescent Vente[/url] kamagra effervescent Jelly 100mg Le Havre Ou Acheter kamagra effervescent
[url=http://dapoxetin.iwopop.com/]dapoxetine price[/url] priligy online generic priligy
pharmacie online



,[url=http://effervescent.iwopop.com/]pharmacie par internet[/url]

  cuisine
  • American(traditional)
  • Cafe Hon
  • Gertrude's
  • Regi's
  • Asian (other)
  • Ambassador
  • Cafe Zen
  • Nam Kang
  • Saigon Remembered
  • barbecue
  • Alabama BBQ Co.
  • Big Bad Wolf BBQ
  • Rub BBQ
  • breakfast
  • Blue Moon Cafe
  • Miss Shirley's
  • eclectic
  • Pazo
  • Saffron
  • Taste
  • French
  • Brasserie Tatin
  • Petit Louis
  • Italian
  • La Scala
  • La Tavola
  • Mexican
  • Arcos
  • Holy Frijoles
  • Zen West
  • Latin/Caribbean
  • Little Havana
  • Trinidad Gourmet
  • Yabba Pot
  • pizza
  • Iggie's
  • S'ghetti Eddie's
  • pub/bar
  • Brewer's Art
  • Red Star
  • sandwiches
  • On the Hill Cafe
  • seafood
  • Bertha's
  • Costas Inn
  • Kali's Court
  • sushi
  • Asahi
  • Kawasaki Cafe
  • Matsuri
  • XS
  • Thai
  • Thai Landing
  • Thai Restaurant
  • vegetarian
  • Yabba Pot
  •   neighborhood
  • Bolton Hill
  • b Bistro
  • On the Hill Cafe
  • Butcher's Hill
  • Salt
  • Canton
  • Three...
  • Charles Village
  • Gertrude's
  • Nam Kang
  • Trinidad Gourmet
  • Yabba Pot
  • Dundalk
  • Costas Inn
  • Federal Hill
  • Bicycle
  • Little Havana
  • Matsuri
  • Regi's
  • Rub BBQ
  • Fell's Point
  • Asahi
  • Bertha's
  • Kali's Court
  • Kawasaki
  • Red Star
  • Hampden
  • Cafe Hon
  • Holy Frijoles
  • Lauraville
  • Alabama BBQ Co.
  • Big Bad Wolf BBQ
  • Chameleon Cafe
  • Little Italy
  • La Scala
  • La Tavola
  • Mount Vernon
  • Brewer's Art
  • Helmand
  • Iggie's
  • Nam Kang
  • Saffron
  • Thai Landing
  • XS
  • Tuscany/Canterbury
  • Ambassador
  • Brasserie Tatin
  • Upper Fell's Point
  • Arcos
  • Waverly
  • Trinidad Gourmet
  • Thai Restaurant
  •   cost
  • $$
  • Alabama BBQ Co.
  • Ambassador
  • Arcos
  • Asahi
  • Bertha's
  • Big Bad Wolf BBQ
  • Cafe Hon
  • Cafe Zen
  • Helmand
  • Holy Frijoles
  • Iggie's
  • Little Havana
  • Miss Shirley's
  • Nam Kang
  • Red Star
  • Saigon Remembered
  • S'ghetti Eddie's
  • Thai Landing
  • Thai Restaurant
  • Zen West
  • $$$
  • b Bistro
  • Brasserie Tatin
  • Brewer's Art
  • Chameleon Cafe
  • Costas Inn
  • Gertrude's
  • Kawasaki
  • La Scala
  • La Tavola
  • Matsuri
  • Pazo
  • Peter's Inn
  • Petit Louis
  • Regi's
  • Salt
  • Taste
  • Three...
  • XS
  • $$$$
  • Bicycle
  • Kali's Court
  • Saffron
  • $$$$$
  • none yet
  • Labels

  • gastronomic economics
  • lists
  • markets
  • news
  • reviews
  • Baltimore
  • Philadelphia
  • Foodie Links and Blogs

      foodie bloggers in Baltimore
      foodie blogroll
      foodie economist links

    Blog Archive