Womanomics and sunk costs
Posted July 23, 2008on:
Cactus Kate states that men should pay the bill when taking a woman out – because of the substantial expenses associated with being a woman.
As an economist, I’m not so sure if this does it – after all, aren’t these all sunk costs, which implies that they shouldn’t have any impact on the final negotiation at the end of the night that determines who should pay the bill for the date.
As a result, the demands that Ms Kate place on men to pay the entire bill, based on these costs, may seem somewhat “irrational” (I hate that word).
Furthermore she has stated that if guys don’t pay, then any late night rendezvous are out of the question. This also seems a bit weird – surely when it comes time to decide whether the meeting of minds worth doing then cost associated with the bill is also sunk. If we assume that how the bill is split gives no information on how good the quality of the late night experience will be this also seems “irrational”.
However, womens ability to pre-commit to action based on these fixed costs is actually an incredibly intelligent mechanism for improving their bargaining position when it comes time to decide who should pay for the date!
By linking the cost of dinner and the cost of “maintenance” to the probability that the male will get action, they have given men the incentive to pay more of the dinner bill – effectively strengthening their bargaining position. Cactus Kate takes this to a whole other level, by managing to pre-commit to the strategy that if the man doesn’t pay the whole bill he doesn’t get any – thereby strengthening her bargaining position in the case of determining meal payment.
Now the way we have discussed this game, the costs associated with “maintenance” should still not matter – after all at the point of bargaining over the meal, the maintenance costs are still sunk. However, it is by appealing to “fairness”, and making herself feel “disgust” based on the fact men don’t pay as much for “maintenance”, that Cactus is able to sustain the extreme strategy of not sleeping with extremely hot Italian men when they don’t pay the full bill – this is illustrated in the following quote:
I suddenly didn’t find him at all attractive and so I took the lift on my own back to level 4 to watch Cable complete with John McCain ads.
So the sunk cost that she has placed in make-up, clothes etc influences what she views is fair when it comes to paying for the meal. If the man does not conform to this view of fairness it negatively influences his chances of action – as a result the sunk cost on maintenance should then have an impact on the males optimal choice.