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Wiley InterScience | |||
  The Economic JournalVolume 114 Issue 495, Pages 265 - 280 Published Online: 1 Apr 2004 Journal compilation © 2010 by the Royal Economic Society (Registered Charity No. 231508) Published on behalf of the Royal Economic Society
Abstract | References | Full Text: HTML, PDF (Size: 101K) | Related Articles | Citation Tracking  The inefficiency of splitting the bill* Copyright 2004 Royal Economic Society 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. Date of receipt of first submission: August 2002 Date of receipt of final typescript: July 2003 | 
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