Londonomics: Splitting Headache

By Londonist Last edited 120 months ago
Londonomics: Splitting Headache
restaurantslit.jpg

Ugh, splitting the bill. At worst it’s like showing your parents around the touristy bits of town — expensive, unfun, leaving everyone involved with the feeling that they’ve been shafted. Inevitably someone skips the starter; someone else orders two sides; somebody's off the sauce; puddings either divide opinion or are themselves divided by two or more diners.

Simple game theory points to one way to sort this out. Before the meal, everyone should agree to split the bill evenly. That way, everyone will be encouraged to maximise their orders; competition will level things out.

Unfortunately, but perhaps predictably, economists have discovered that this approach tends to increase negative externalities. Or to put it in English, people get selfish and greedy. Taking turns – one person picks up the tab each time – will only tend to exacerbate the effect.

How about a little creative market regulation then? After an initial glance at the menu, everyone throws in as much money as they think they’re going to spend. After the meal, any shortfall is made up by the party as a whole.

Alas, this strategy is thwarted by the ‘free rider’ – and don’t we all know one of those? One person who sees a chance to underbid, and sticks the rest of us with the excess.

Oh, and the simplest and fairest method – everyone just pays for exactly what they consume? Well, after a few glasses of wine, after toting up dishes that tend to end in .50 or .95 – without the aid of the menu – we then have to calculate 17.5 per cent VAT and venture into highly contentious territory of tipping, which is a whole other post (or perhaps a whole other blog).

Sorry, this just isn’t going to work. We can use economics to explain house prices, interest rates and even the popularity of baby names. But when it comes to eating out, you’re on your own.

By Mike Wendling

Image by Homemade, from the Londonist Flickr pool.

Last Updated 30 May 2008

SallyB2

I'm pretty proud to be British, and definitely proud to be a Londoner, but when it comes to the question of eating out, I am frequently embarassed. Why, when other nations fight for the honour of paying a restaurant bill, do the Brits fight over who had that extra orange juice? It's disgraceful. I used to be a waitress, and sometimes was left wondering why people bothered to go out together if they couldn't settle the bill in an equitable manner.

DeanN

In more impecunious days I was, regrettably, one of those tight-assed bastards who'd quibble over every line on the bill and only pay my share. Now with more disposable cash I'm far more generous and wholeheatedly support the egalitarian method.

However, I feel that the reluctance to throw in equal amounts isn't just down to selfishness. It reflects the tight financial margins that folk who live in London have to manage with - where laying out an extra ten quid on a meal out can have major ramifications, particularly if payday is still a far-off glint on the horizon.

Siany

I'm more than happy to shout dinner or split the bill down the middle depending on the financial situation.

One of my closest friends however will only pay for what she's ordered. I have a much more relaxed attitude towards cash and buying drinks and stuff and it can cause problems.

Some people just look at money in different ways. We still adore each other, but now we pay for our own stuff so it doesn't cause any issues. She's the one who still has money left over at the end of the month while I'm eating toast for dinner becuase I've run out of money.

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