Do you have to pay for other people's drinks if you didn't order any? Do you chip in for an appetizer you didn't eat? How do you split tax and tip?
So starts the CNN story about splitting the check (without losing friends). The social etiquette of group dinning may be evolving due to the advent of smartphone payment apps like Venmo and Square Cash that allow funds transfers among friends. Moreover, apps such as Tab or Plates are specifically designed to split the check using these funds transfer apps.
It used to be that when I initiated the invitation, I expected to pick up the tab. Often, there was an expectation of later reciprocal invitations which helped facilitate the development of longer term relationships. Sometimes though, it encouraged free-riding as they ordered from the top-shelf. But if it is easy settle-up after each shared meal, both reciprocation and free-riding are reduced.
Paying only for what you ordered -- particularly down to the cent -- used to feel stingy. But the apps help reduce the pressure to round up or kick in a little extra.
In the strategic view of bargaining, the “ability for one party to commit to a position gives one player bargaining power over its rivals.” (Froeb, McCann, Shor, Ward, 2016) The trick is to not have to reach for the check, simply state that you need to use your credit card; request a separate check. This is how the Millennials do it. Personally, we were dreading going out with our friends that always ordered twice what my husband and I ordered. Splitting the check, like all good Baby Boomers do, we paid many times over what we actually ate and drank on every occasion. Frankly, we were sick of it. My daughter said it was ridiculous and told us all of her friends simply pay their own way. I liked it. It took some nerve but it worked! I committed to this position, and funny thing, their bill was just about what ours was. No more free rides. We still go out with this couple but it’s so much more enjoyable now that we’re each paying our own way. (For us anyway!)
ReplyDeleteFrom our friends’ perspective though, there has been a shift in demand. “Changes in price lead to changes in quantity demanded.” (Froeb, et al, 2016) The quantity of dinner dates has decreased due to the increased price of our friend’s dinner because we are no longer footing a good portion of the bill. Also, their dilemma becomes an uncontrollable factor. “An uncontrollable factor is something that affects demand that a company (person) cannot control.” (Froeb et al, 2016) At the end of the day, I think they got the message. They’re ordering within our means, so we may just go back to splitting the bill to avoid any tension. Sometimes friendship is worth the extra cost. (Psychological pricing? - LOL)
References:
Froeb, L., McCann, B., Shor, M., Ward, M., 2016. Managerial Economics A Problem Solving Approach, Boston, MA. Cengage
When I go out to eat the social etiquette tends to be split the bill equally. However, once in a while there's that one person who says, "I didn't eat the appetizer and my food was $2 less and my drink was $1 less..." You get the point. So is this person bargaining or are they simply going against societal norms? And, when this happens does the other person (or people) make a counteroffer? Do people settle for the other paying less or insist that the bill be split evenly because it's easier? OR, on the flip side the person who ordered 4 drinks and the lobster might politely tell the rest of the table that they'll pay more... again bargaining...
ReplyDeleteAnother societal norm is waiting to see who picks up the check. For instance, if you go out on a date, should the man pay? Who asked who to dinner? This could be referred to as a game of chicken-- "both parties will try to steer the game to their preferred equilibrium by committing to a position" (Froeb et al, p. 206). Who will move first? (who will reach for the check first).
As Michele stated above, sometimes millennials split the bill. I am a millennial, but on the older side of millennial. It seems to be out of the norm to do this, or we get embarrassed by the person who requests it. It creates a shift in demand.
At the end of the meal, the reality is the bill has to be paid. Someone can make a "take it or leave it" offer, but it needs to be negotiated and someone needs to pay the bill.
In response to Whitney and Michele – your posts are actually super fascinating to me. I can’t help but think I have poor manners right now, because for me, splitting the check among my friends never meant splitting it evenly, but splitting it…by what we each bought. Can we blame this on me being a millennial? And at 28, I’m right in the middle of the pack between the split of older and younger millennials. The only time I have ever had issues splitting checks is with one particular friend of mine who has a bad habit of asking people to split plates (appetizers and desserts) with her, but then always eats the larger “half.” I guess in this sense, I can see where the bargaining might be present, but I see it more as a situation of opportunity costs where the alternatives to outcomes are what determine the agreement (Froeb, McCann, Shor, & Ward, 2016, pp. 209, 211). I still always agree to pay for half, even though I don’t get the full half of this dish, because having some of the dish and paying a little more than I want to is better to me than the alternative of paying for what I ate and having an argument about her behavior!
DeleteAnother thing I realize may tie back to a millennial issue, is the only time I ever have confusion with picking up the check is when it comes to dining out with our parents. When I take my mom out, I always pay for her, there’s no question about it for me – no game or bargaining. However, when my dad or my fiancées parents come to visit from out of town there’s always this awkward back and forth of us trying to pick up the check, them trying to insisting it’s their treat. I suppose this definitely makes it a bargaining situation, a game of chicken, where none of us are making a solid commitment (Froeb, McCann, Shor, & Ward, 2016). It also reminds me of the negotiation chapter in the text – or maybe, I just lack a lot of necessary social skills, but the signaling in these situations gets very confusing to me.
References
Froeb, L. M., McCann, B. T., Shor, M. & Ward, M. R. (2016). Managerial economics: A problem solving approach. Boston, MA: Cengage Learning.
Wow, what a relief these apps are for me. I have never felt comfortable with group dining out since I am on such a strict budget. To make dining out affordable, I always order water and keep my appetizer and/or meal order within an affordable range for me. It must fit my budget. If it doesn’t, the entire experience turns from one of fun and relaxation to one of drudgery and stress. By following the strategic view of bargaining concept, I can commit to my share of the dining out experience from the very beginning by suggesting we use one of the smartphone apps to make payment easier for all parties.
ReplyDeleteI have been put into the awkward position of having to either speak up or pay up when someone at the table says, “Let’s just split the bill evenly between us.”. This statement either forces me to speak up, drawing unwanted attention to myself, to stay within my budget or I just remain silent, so as not to feel embarrassed, and pay both emotionally and financially. The opportunity cost of suggesting payment during the initial phase of making plans, will put me in the position to enter the dining experience knowing I won’t be paying for items that I haven’t ordered. If the app idea is accepted, I can choose to enter the dining group. If not, I have the option of declining gracefully. This allows me to enjoy friend and family gatherings without feeling stingy or being put on the spot to pick up the tab for others.
Michael Ward’s post brings up a situation I have encountered many times. Going out to dinner with friends who tend to order a lot more than you and ask the waitress to split the bill down the middle can be an awkward situation. You don’t want to seem rude or harsh by saying no, but you also don’t want to have to pay for something you didn’t eat or drink. When I first heard about Venmo I thought it was such a great idea. I use it with my friends all the time to either request payment or pay them based on whoever paid. These apps that allow you to split the check or bill with others allows for a positive outcome when relating to the strategic view of bargaining. The economic concept of bargaining can be modeled as a game of chicken where the ability to commit to a position gives one player bargaining power over rivals (Froeb, McCann, Shor, Ward, 2016, pg. 205). By making the commitment upfront that you will be using the apps such as Venmo, or square cash to split the check will make it clear that you are only paying for what you ordered, as there is now less pressure. Another economic concept that can be related to splitting the check without losing friends is signaling. Signaling is an informed party’s effort to communicate her information to the less informed party (Froeb, McCann, Shor, Ward, 2016, pg. 249). By communicating and explaining the app upfront on how it works to your friends will inform them on the details and how the bill will be paid fairly. So you won’t be stuck paying for food and drinks you didn’t eat or drink. By following through with these economic concepts will only help you to make a hard situation that could be awkward, turn out easy without losing a friendship or having an awkward encounter.
ReplyDeleteReference:
Froeb, L. M., McCann, B. T., Shor, M., Ward, M. R. Managerial Economics a Problem Solving
Approach. Fourth Edition. Boston, MA: Cengage Learning, 2016.
The economic principle of bargaining can be seen not just in big business transactions, but in any transaction between two parties, such as splitting the check over dinner. Many real-life bargaining is considered non-strategic, or axiomatic. In this type of bargaining tells you that if you can decrease your own gain to reach agreement by improving your outside option, you become a tougher bargainer because you have less to gain by reaching agreement. (Froeb, McCann, Shor, & Ward, 2016) If your rival has more to gain by agreeing, he becomes more eager to reach agreement, and accepts a smaller share of the surplus. If someone over orders because they know they can split the bill 50/50 and make out by getting more for their money, having an app that splits the bill according to what each order now takes away the incentive to over order. Or if you say before ordering that you will only pay for what you order, you reduce your own gain it makes you less willing to compromise and helps you to improve your position. The idea of non-strategic bargaining harkens back to the idea of opportunity cost, or the cost of an alternative is the profit you give up to pursue it.
ReplyDeleteGroup dining can be seen as a game of mental bargaining without actually verbally working out the details of who is paying what. Often when I’m out to dinner in a group setting most people at the table at some point are thinking in their head “who is paying? How are we paying? Are we splitting it? Who is asking for separate checks? The best way to bargain and have an acceptable outcome most of the time is to discuss payment plans up front before dinner. This however seldom occurs so bargaining takes place at the end of dinner where certain people are offering to pay more than the share and other people are purposely staring into space hoping to skirt by with a lowered or no bill amount to pay. I believe waiting until the end of dinner creates unnecessary tension and uncertainty. People are often waiting for someone to “make the first move” that way they can avoid the awkward looks at the table when they may be viewed as the “cheap” one for asking for a separate check. If you can credibly commit to a position by, for example, making a take-it-or-leave-it offer, then go ahead. If, as is more likely commitment is costly or not credible, then try to change the alternatives to agreement, as they determine the terms of agreement (Froeb, McCann, Shor, Ward, 2016). It really is a funny game us first world humans play
ReplyDeleteReferences:
Froeb, L. M., McCann, B. T., Shor, M., Ward, M. R. Managerial Economics a Problem Solving
Group dining can be seen as a game of mental bargaining without actually verbally working out the details of who is paying what. Often when I’m out to dinner in a group setting most people at the table at some point are thinking in their head “who is paying? How are we paying? Are we splitting it? Who is asking for separate checks? The best way to bargain and have an acceptable outcome most of the time is to discuss payment plans up front before dinner. This however seldom occurs so bargaining takes place at the end of dinner where certain people are offering to pay more than the share and other people are purposely staring into space hoping to skirt by with a lowered or no bill amount to pay. I believe waiting until the end of dinner creates unnecessary tension and uncertainty. People are often waiting for someone to “make the first move” that way they can avoid the awkward looks at the table when they may be viewed as the “cheap” one for asking for a separate check. If you can credibly commit to a position by, for example, making a take-it-or-leave-it offer, then go ahead. If, as is more likely commitment is costly or not credible, then try to change the alternatives to agreement, as they determine the terms of agreement (Froeb, McCann, Shor, Ward, 2016). It really is a funny game us first world humans play
DeleteReferences:
Froeb, L. M., McCann, B. T., Shor, M., Ward, M. R. Managerial Economics a Problem Solving
I find the whole notion of using an app to split the check ridiculous. Whatever happened to either one party paying then the other party reciprocating at the next outing or splitting it down the middle? If dinner is $300 each couple pays $150, what is so hard about that? Getting into the premise of using an app to determine a “fair share” because one party was drinking alcohol and the other wasn’t is ridiculous. Your going out to dinner with people who are supposed to be your friends is it really worth an accounting session over a few bucks?
ReplyDeleteWhen moral hazard and adverse selection come into play maybe you shouldn’t be going out to dinner with those people. Moral Hazard is caused by hidden actions unknown to the other party so if one party orders differently then they normally would because they know the check is going to be split which causes the other party to request using an app to pay a fair share the next time you really need to question the morals of your so-called friends. The idea that people would want to think about and implement a method of adverse selection while dining is ridiculous. If a party feels that they are dining with high risk individuals who are going to run up the tab on purpose and they want to use an app to track what people eat and make sure that the bill is allocated by consumption is a bit much for me.
The thought that people really think about if others are drinking do they need to split that portion of the bill or if someone orders an appetizer and you didn’t eat any of it should you be obligated to put money toward that is overbearing for me. I don’t have time to be bothered with any of that. My wife and I only go out to dinner with certain people. I do not change how I order because of social stigmas. If I am going out to dinner I will have a Filet Mignon or a Ribeye, a glass or two of wine, a shrimp cocktail a cappuccino and desert. I expect everyone who I am dining with to order what they want to order, and we split the bill.