Unscrupulous diner's dilemma

(Redirected from Diner's dilemma) Game theory dilemma

In game theory, the unscrupulous diner's dilemma (or just diner's dilemma) is an n-player prisoner's dilemma. The situation imagined is that several people go out to eat, and before ordering, they agree to split the cost equally between them. Each diner must now choose whether to order the costly or cheap dish. It is presupposed that the costlier dish is better than the cheaper, but not by enough to warrant paying the difference when eating alone. Each diner reasons that, by ordering the costlier dish, the extra cost to their own bill will be small, and thus the better dinner is worth the money. However, all diners having reasoned thus, they each end up paying for the costlier dish, which by assumption, is worse than had they each ordered the cheaper.

Formal definition and equilibrium analysis

Let a represent the joy of eating the expensive meal, b the joy of eating the cheap meal, k is the cost of the expensive meal, l the cost of the cheap meal, and n the number of players. From the description above we have the following ordering $k-l>a-b$ . Also, in order to make the game sufficiently similar to the Prisoner's dilemma we presume that one would prefer to order the expensive meal given others will help defray the cost, $a-{\frac {1}{n}}k>b-{\frac {1}{n}}l$

Consider an arbitrary set of strategies by a player's opponent. Let the total cost of the other players' meals be x. The cost of ordering the cheap meal is ${\frac {1}{n}}x+{\frac {1}{n}}l$ and the cost of ordering the expensive meal is ${\frac {1}{n}}x+{\frac {1}{n}}k$ . So the utilities for each meal are $a-{\frac {1}{n}}x-{\frac {1}{n}}k$ for the expensive meal and $b-{\frac {1}{n}}x-{\frac {1}{n}}l$ for the cheaper meal. By assumption, the utility of ordering the expensive meal is higher. Remember that the choice of opponents' strategies was arbitrary and that the situation is symmetric. This proves that the expensive meal is strictly dominant and thus the unique Nash equilibrium.

If everyone orders the expensive meal all of the diners pay k and the utility of every player is $a-k$ . On the other hand, if all the individuals had ordered the cheap meal, the utility of every player would have been $b-l$ . Since by assumption $b-l>a-k$ , everyone would be better off. This demonstrates the similarity between the diner's dilemma and the prisoner's dilemma. Like the prisoner's dilemma, everyone is worse off by playing the unique equilibrium than they would have been if they collectively pursued another strategy.

Experimental evidence

Uri Gneezy, Ernan Haruvy, and Hadas Yafe (2004) tested these results in a field experiment. Groups of six diners faced different billing arrangements. In one arrangement the diners pay individually, in the second they split the bill evenly between themselves and in the third the meal is paid entirely by the experimenter. As predicted, the consumption is the smallest when the payment is individually made, the largest when the meal is free and in-between for the even split. In a fourth arrangement, each participant pays only one sixth of their individual meal and the experimenter pay the rest, to account for possible unselfishness and social considerations. There was no difference between the amount consumed by these groups and those splitting the total cost of the meal equally. As the private cost of increased consumption is the same for both treatments but splitting the cost imposes a burden on other group members, this indicates that participants did not take the welfare of others into account when making their choices. This contrasts to a large number of laboratory experiments where subjects face analytically similar choices but the context is more abstract.

References

Glance, Natalie S.; Huberman, Bernardo A. (March 1994). "The dynamics of social dilemmas". Scientific American.
Uri Gneezy, Ernan Haruvy, and Hadas Yafe (2004). The inefficiency of splitting the bill. The Economic Journal, 114(495), 265-280.
Gneezy, Uri; Haruvy, Ernan; Yafe, Hadas (April 2004). "The inefficiency of splitting the bill" (PDF). The Economic Journal. 114 (495): 265–280. doi:10.1111/j.1468-0297.2004.00209.x. Archived (PDF) from the original on 2016-02-05. Retrieved 2015-06-08.

External links

If You're Paying, I'll Have Top Sirloin by Russell Roberts

v t e Topics of game theory
Definitions	Congestion game Cooperative game Determinacy Escalation of commitment Extensive-form game First-player and second-player win Game complexity Graphical game Hierarchy of beliefs Information set Normal-form game Preference Sequential game Simultaneous game Simultaneous action selection Solved game Succinct game Mechanism design
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Classes of games	Auction Bargaining problem Global game Intransitive game Mean-field game n-player game Perfect information Large Poisson game Potential game Repeated game Screening game Signaling game Strictly determined game Stochastic game Symmetric game Zero-sum game
Games	Go Chess Infinite chess Checkers All-pay auction Prisoner's dilemma Gift-exchange game Optional prisoner's dilemma Traveler's dilemma Coordination game Chicken Centipede game Lewis signaling game Volunteer's dilemma Dollar auction Battle of the sexes Stag hunt Matching pennies Ultimatum game Electronic mail game Rock paper scissors Pirate game Dictator game Public goods game Blotto game War of attrition El Farol Bar problem Fair division Fair cake-cutting Bertrand competition Cournot competition Stackelberg competition Deadlock Diner's dilemma Guess 2/3 of the average Kuhn poker Nash bargaining game Induction puzzles Trust game Princess and monster game Rendezvous problem
Theorems	Aumann's agreement theorem Folk theorem Minimax theorem Nash's theorem Negamax theorem Purification theorem Revelation principle Sprague–Grundy theorem Zermelo's theorem
Key figures	Albert W. Tucker Amos Tversky Antoine Augustin Cournot Ariel Rubinstein Claude Shannon Daniel Kahneman David K. Levine David M. Kreps Donald B. Gillies Drew Fudenberg Eric Maskin Harold W. Kuhn Herbert Simon Hervé Moulin John Conway Jean Tirole Jean-François Mertens Jennifer Tour Chayes John Harsanyi John Maynard Smith John Nash John von Neumann Kenneth Arrow Kenneth Binmore Leonid Hurwicz Lloyd Shapley Melvin Dresher Merrill M. Flood Olga Bondareva Oskar Morgenstern Paul Milgrom Peyton Young Reinhard Selten Robert Axelrod Robert Aumann Robert B. Wilson Roger Myerson Samuel Bowles Suzanne Scotchmer Thomas Schelling William Vickrey
Search optimizations	Alpha–beta pruning Aspiration window Principal variation search max^n algorithm Paranoid algorithm Lazy SMP
Miscellaneous	Bounded rationality Combinatorial game theory Confrontation analysis Coopetition Evolutionary game theory Glossary of game theory List of game theorists List of games in game theory No-win situation Topological game Tragedy of the commons

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