Splitting Bills


A group at a restaurant can either equally divide the bill or have everyone pay for the food he got. When the bill is divided equally, everyone is spending everyone else’s money. If there are five people in your group who will equally split the check, then the cost to you of spending an extra $1 is but 20 cents. Thus, when considering whether you should get a pricey $10 appetizer, remember that the appetizer will only increase what you pay by $2. True, you will have to help pay for everyone else’s appetizers. You will, however, have to do this regardless of whether you get an appetizer yourself.

Obviously, restaurants should encourage their patrons to split checks equally because this creates incentives for everyone to order more. Restaurant customers often have difficulty splitting the check so that everyone pays for what he ordered. Given the widespread use of computers, it would be easy for most restaurants to separately calculate the cost of each person’s food. Since restaurants want customers to equally divide the bill, however, they have little incentive to provide these data.

When college roommates sharing a phone equally divide the bill, they are likely to make too many toll calls. If two roommates know that they will equally split the bill, then the cost to each of them of making an additional call is halved. This, of course, results in both roommates making far more calls than they would if they were each paying their own bill themselves. Consequently, to keep down telephone expenses roommates should agree to specifically calculate the cost of both people’s calls.




Game Theory at Work(c) How to Use Game Theory to Outthink and Outmaneuver Your Competition
Game Theory at Work(c) How to Use Game Theory to Outthink and Outmaneuver Your Competition
ISBN: N/A
EAN: N/A
Year: 2005
Pages: 260

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