When the check comes during a group meal it may sound like an odd place to practice Game Theory, but behavioral scientists have been studying how diners interact in group settings for some time. The problem is called the “Unscrupulous Diner’s Dilemma”. This dilemma causes most diners in large groups to want to avoid dividing the bill evenly because of our innate understanding of human nature and self-interest.
So how does the dilemma work in the real world? Imagine you and your friends Steve, Kevin and Isadora are going out to a nice Italian restaurant. The restaurant only serves 2 dishes: plain spaghetti for $5, and spaghetti with meatballs for $15. When dining out with your friends in the past you have always split the bill evenly. Remembering this, your inner Machiavelli kicks in.
You love the meatballs, but you don’t think they are 3x ($5 -> $15) as good as plain spaghetti. In your opinion, they are only twice as good as the plain noodles. Since you have agreed to split the bill evenly though, it might not cost you 3x if some of your friends ignore their meaty cravings. Instead of $15 your share would only be $7.50 if the rest of the party opts for the plain dish. In that scenario, you get a meal that is 2x better than your other option while paying only 0.5x the price of the original dish, score!
The dilemma becomes apparent when each member of the party channels their inner glutton, comes to the same conclusion, and upgrades their order to the meatballs. When this happens, the party negates each other’s selfish advantage and each member ends up with a sub-par result. They end up paying 3x in price for a dish that they would only enjoy 2x more, bummer.
Shout out to Youtube user “SchneeBos” who posted a nifty animation of the Unscrupulous Diner’s Dilemma with better art skills than I could ever muster:
Scientists have run experiments with diners to prove the underpinnings behind the Unscrupulous Diner’s Dilemma. In 2004 a research paper called “The Inefficiency of Splitting the Bill” by Uri Gneezy, Ernan Haruvy, and Hadas Yafe was published by the Royal Economic Society. In their experiment, the researchers recruited 10 groups of students (3 men and 3 women each) to dine out. The groups were given specific instructions on how the meal would be paid for before they sat down:
- 4 groups were told to split the bill based on what each person ordered
- 4 groups were told to split the bill equally amongst them
- 2 groups were told the meal would be free
Once the tables were cleared and the receipts tabulated, it was clear that the dilemma wasn’t just some equation in a science book. In each case, the diners sought to maximize what they thought would be the best ordering strategy to benefit themselves. The group that knew they had to pay for what they ordered had the lowest order amount. The groups that knew they would evenly split the bill had individual bills on average 36% higher than the first group. The diners that knew they were getting comped went wild and spent 220% more than the first group.
So what does this mean for the average restaurant owner? A radical solution might be to let diners know that they cannot split checks by menu items in the hope that you can drive up your average group tickets by 36%, but that is likely to backfire with your customers.
The best solution for restaurants is to make sure that your location is accommodating to large groups. This means being able to handle seating large groups via reservations, call-ahead seating or an easy to discover wait list solution. You also want to be sure that you can accommodate split checks of every kind. Certain POS solutions can take the headache out of split checks, so be sure to include this when searching for a solution for your restaurant.
If you can handle large groups and split checks, customers will have a simple and welcome interaction with your business at the beginning and end of their meal. Small considerations like this allow your customers to have a better experience, and in some cases will tip the Unscrupulous Diner’s Dilemma in your favor.