The inefficiency of splitting the bill
AbstractWhen agents are ascribed selfish motives, economic theory points to grave inefficiencies resulting from externalities. We study a restaurant setting in which groups of diners are faced with different ways of paying the bill. The two main manipulations are splitting the bill between the diners and having each pay individually. We find that subjects consume more when the cost is split, resulting in a substantial loss of efficiency. Diners prefer the individual pay to the inefficient split-bill method. When forced to play according to a less preferred set of rules, they minimise their individual losses by taking advantage of others. Copyright 2004 Royal Economic Society.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 114 (2004)
Issue (Month): 495 (04)
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- Jan Stoop & Charles N. Noussair & Daan van Soest, 2012.
"From the Lab to the Field: Cooperation among Fishermen,"
Journal of Political Economy,
University of Chicago Press, vol. 120(6), pages 1027 - 1056.
- Stoop, Jan & Noussair, Charles & van Soest, Daan, 2010. "From the lab to the field: Cooperation among fishermen," MPRA Paper 28924, University Library of Munich, Germany.
- Charness, Gary & Gneezy, Uri & Kuhn, Michael A., 2013. "Experimental methods: Extra-laboratory experiments-extending the reach of experimental economics," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 93-100.
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