The Dinner Dilemma, or Why Splitting the Bill Is a Bad Idea

"Split it down the middle?" is a common phrase when dining with a friend, but there are exceptions. Maybe you'd rather take care of the whole bill if the company is very good or if they're going through a rough patch and you decide to help out. But what happens when the group is bigger? Essentially, we enter the territory of the Dinner Dilemma, where everyone tries to exploit the established rules (in this case, splitting the bill equally), and end up worse off than before.

Imagine a group of four friends who get together to catch up, and while they're at it, invade a popular burger joint where they'll devour a few burgers. Looking at the menu, the group sees that the place offers only a good but regular-sized burger for 1 euro, and a super-mega-archi burger for 3 euros.

Before ordering, the four friends agree to split the total bill equally. This is where we get into the mind of one of them. This friend knows the regular burger is decent, but the super burger looks great... though not for 3 euros. The key is that by splitting the bill equally, he can shift a percentage of the cost onto his friends' shares. If he orders a super burger and his friends order three regulars, he'll end up paying 1.50 euros instead of the original 3. So far, so good, but...

The Dinner Dilemma

... the truth is that his friends aren't idiots, and they reach the same conclusion: order the super burger and distribute the extra charge among the shares. Under this humble example, the Dinner Dilemma teaches us that when trying to manipulate the initial conditions for personal gain, the four friends reach an equilibrium in which everyone is worse off, meaning they pay the full price of the super burger when they didn't want to in the first place.

The most interesting part is that three scientists, Uri Gneezy, Ernan Haruvy, and Hadas Yafe, decided to test the dilemma in real life. They gathered a group of people for a meal, gave each participant 20 dollars, and split them into three categories: In the first, each would pay individually. In the second, the bill would be divided, and in the third, dinner would be free.

As expected, those who paid individually were the ones who ate the least, those who received free dinner took full advantage of the situation, and those who split the final amount ended up in the middle.

In the second phase, they gathered a new group of participants, but this time everyone would pay individually with one condition: they would only pay one-sixth of the cost of their food. That detail allowed the new group to reach the same consumption level as the previous group in the splitting category.

In summary, the Dinner Dilemma is a lesson in efficiency and selfishness. Under an arbitrary system, each element will try to take advantage, even if the conditions of the system worsen. The most efficient thing is to pay separately, and according to the study, 80 percent of the participants preferred that from the start.

Access the study (PDF): Click here