What is the Diner's Dilemma?

Diner's dilemma refers to a situation where several participants in a game strive to get the highest reward but end up destroying themselves. In a bid to come out with the best result, players in a game put one another in an unpalatable situation. Diner's dilemma occurs in other contexts aside from games.

When Does Diner's Dilemma Occur?

Diner's dilemma is otherwise called an unscrupulous diner's dilemma. This dilemma occur when a group of people who go out to dine decide to split the cost equally between them even before ordering their meal. Seeing that the cost will be shared by all the participants, members go ahead to eat expensive meals and not the cheap ones. In the long run, the group pays more for the meal that they thought they would. Ordering expensive meal as against what each participant would have ordered if the bill was not split is influenced by human psychology. This act eventually puts all the participants in an unfavorable position as they end up incurring higher risks and expenses.

Example of Diners dilemma

The most common scenario where the diner's dilemma occur is in a dinner setting where people agree to split costs. Although many people have experienced this dilemma at one time or the other, the term diner's dilemma emerged much later. This is a good example of diner's dilemma in a real-life situation; Anna, Bran, and Bright are friends and decide to go out for dinner on an agreement that the bills will be shared equally amongst the three. At the restaurant, they are presented a menu list and need to decide what meal to eat, the three friends then opt for expensive meals even though they are not likely to eat such meal if the bills were not split. Based on their choice of meals, the friends incur more costs than they naturally would have.

Related Topics

• Market Structure
• Perfect Competition
• Bidding War
• Complements & Substitutes
• Substitution Effect
• Imperfect Competition
• Market Power
• Price Takers
• Price Makers 
• Perfect Competition and Decision Making
• X-Efficiency
• Captive Market
• Contestable Market Theory
• Highest Profit Point in a Perfectly Competitive Market
• Marginal Revenue
• Using Marginal Revenue and Marginal Costs to Maximize Profit
• Marginal Revenue Curve
• Profit Margin and Average Total Cost
• Break Even Point - Cost Curve
• Shutdown Point - Cost Curve
• Short-Run Decisions Based Upon Costs in a Perfectly Competitive Market
• Marginal Costs and the Supply Curve for a Perfectively Competitive Firm
• Long-Run Average Supply (LRAS)
• Decisions to Enter or Exit a Market in the Long Run
• Long-Run Equilibrium in a Perfectly Competitive Market
• Constant, Increasing, and Decreasing Cost Industries
• Productive and Allocative Efficiency in Perfectly Competitive Markets
• Market Efficiency
• Market Inefficiency
• Pareto Efficiency
• Market Failure 
• Search Theory
• Monopoly
• Natural Monopoly
• Legal Monopoly
• Bilateral Monopoly
• Promoting Innovation through Intellectual Property
• Predatory Pricing
• How Monopolists Set Price with the Demand Curve
• Total Cost and Total Revenue for a Monopolist
• Marginal Revenue and Marginal Cost for a Monopolist
• Inefficiency of Monopoly
• Perfectly Competitive Market
• Monopolistic Competition
• Duopoly
• Oligopoly
• Differentiated Products
• Perceived Demand for a Monopolistic Competitor
• Monopolistic Competitors Choose Price and Quantity
• Monopolistic Competitors and Entry
• Monopolistic Competition and Efficiency
• Cartel (Economics)
• Game Theory
• Traveler's Dilemma
• Prisoner's Dilemma
• Iterated Prisoner's Dilemma
• Nash Equilibrium
• Diner's Dilemma
• Trembling Hand Perfect Equilibrium
• Gambler's Fallacy
• Arrows Impossibility Theorem
• Backward Induction
• Tournament Theory
• Oligopoly and the Prisoner’s Dilemma
• Forcing Cooperation in a Prisoner’s Dilemma
• Cooperation and the Kinked Demand Curve
• Corporate Merger or Acquisition
• Antitrust Laws
• Herfindahl-Hirschman Index
• Concentration Ratio
• Other Approaches to Measuring Monopoly Power in an Industry
• Restrictive Practices under Antitrust Law
• Natural Monopoly
• Cost-Plus Regulation
• Price Cap Regulation
• Regulatory Capture