Game theory ended my first marriage. My ex-wife had champagne tastes, but we were on a beer budget back in the day. I had just gotten my master’s degree at the university I was attending, and she just didn’t get the role after another audition.
To celebrate my graduation and cheer her up, we went out for dinner with our larger friend circle. After exchanging some conversational niceties, our focus shifted onto the menu. My ex-wife realized that the restaurant served her favorite dish, Moroccan lamb with a merlot glaze, sprinkled with cherry reduction sauce and paired with oven-roasted rosemary pears with gorgonzola cheese. In short, it had every possible high-end ingredient, with a price tag that kept the restaurant in business even if they sold two of the fancy mix a night. Let’s say it cost $150. (And in the ’80s, that was something.)
My ex-wife had a big decision to make: go for the lamb dish or not. In practice, this was a relatively simple choice. She had to decide whether indulging in the meal was worth the hefty price tag. Her to-order-or-not-to-order dilemma has little to do with game theory thus far.
But let’s not forget that she was not the only person in our group. Including the two of us, we were a party of ten, all agreeing to be gentle people and split the bill evenly. As my ex-wife and I were the ones who assembled the party, we patiently waited for everyone to make their order: American hamburger (no extra cheese); Greek salad; French fries; Italian sausage; Brazilian coffee; nothing, thank you; and so on. Everybody was considerate about what the others ordered. And then my ex-wife dropped the bomb, Moroccan lamb. Boom.
Now, from an economic point of view, her decision was smart. She could treat herself to the magnificent Moroccan meal for a tenth of its price. Analyzing her behavior from a purely strategic angle, what would you say? Did she make the right call? What do you think happened next?
Well, Newton’s third law kicked in, that’s what happened. For her action, there was an opposite and (almost) equal reaction. One of our friends called the waiter back. Suddenly, everyone seemed to discover that there was another page on the menu. French fries turned into Beef bourguignon and Italian sausages into risotto con porcini e tartufo. Our humble celebratory get-together started to resemble a vendetta feast of Russian mobsters. Where is our Dom Pérignon?
After bleeding the expensive side of the menu out of options, I finally asked for the bill. Once we split it equally, the result was $342 per person!