Womanomics and sunk costs
Posted on: July 23, 2008
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.
Genius!
8 Responses to "Womanomics and sunk costs"
July 23, 2008 at 4:55 pm
“The hot Italian would need to have prior knowledge of her strategy for it to work OR there would need to be a large enough proportion of woman with this strategy.”
Completely agreed – I get the feeling that women are currently co-operating in order to sustain this strategy. I wonder how that happens – I think that it has to do with the cost they enforce on members that deviate
I suspect that Bratz dolls are males attempt to break down the effectiveness of this co-operative strategy in future generations 😉
“What is a mans optimal strategy?”
Probably depends on the man – I suspect that for many of us it is “pay the bill” 😛 . I wonder if men would be able to sustain some sort of co-operative strategy, or is the cost of deviating just too low?
July 24, 2008 at 10:33 am
probably depends on the man… and the state of the relationship i.e. if there is potential for a repeated game then the optimal strategy will change. perhaps it is ok not to get any this time, because by next time she may be ok with sharing the bill and still getting laid. Or if this is the second or subsequent date (after paying on the first), it may be possible to share the bill, and get some because of the time and sunk costs (time and $ costs) on previous dates meaning both parties are therefore more committed to following through.
July 24, 2008 at 12:28 pm
Game theory indeed.
Explain “sunk costs” with regards women who are dating a man with the intent on dating and then marriage (return on investment) then?
My point is that costs incurred by women with these expectations are the very definition not of a sunk (unrecoverable) cost as they expect a return in terms of marriage and an increase in their net worth. I did the calculation with respect to return or utility by way of sexual interaction.
That I do not have these expectations of a return in terms of increasing my net worth through a relationship should only mean that there is more reason for the idiot to pay for my dinner.
July 25, 2008 at 8:21 am
Hi Cactus,
The game between partners is definitely different to the game for a one-night stand (as Steve as discusses). You are right to view the decision to buy makeup etc as an investment decision as well as a consumption decision – however, that does not remove the sunk cost issue, which is a factor of the timing inherent in the game. Ultimately, it is the timing issue that causes sunk costs to be relevant!
When it comes time to pay the bill, you have already paid for the clothes and makeup, so this is a sunk cost – which implies it should influence the bargaining round that is implicitly involved in deciding who pays the bill.
You are completely right that your expectation of whether the man will pay the bill, or will be good in the sack, influences your earlier choice on how much to “invest” in your attire. This is a separate issue.
Fundamentally, if your “investment” increases the payoff for the other player in the game (the man) we have a positive externality. If you are not taking this externality into account when making your investment decision, you will “under-invest” compared to what would be socially optimal.
Now it does not sound like you under-invest, which makes me suspect that their is some complicated social bargaining solution going on here. If this is the case, the man should really pay for the meal as a way of “splitting the surplus” that occurs when you make the decision not to “under-invest” in your attire.
Such an equilibrium only seems sustainable in the face of set social norms – which is what makes it so fascinating.
July 25, 2008 at 12:55 pm
A word of advice to those guys intently studying this debate here, and on DPF’s/Cactus’ blog(s);
talking about ‘sunk costs’, ‘optimal strategy’, and ‘negative externality’ on a date will not get you laid.
July 25, 2008 at 1:06 pm
“talking about ’sunk costs’, ‘optimal strategy’, and ‘negative externality’ on a date will not get you laid.”
True – but it will give you an awesome story to tell economists when you are out on the piss 🙂
July 25, 2008 at 1:47 pm
I have been reminded that I should have replied in the following way:
“who wants to get laid when you could be talking about ’sunk costs’, ‘optimal strategy’, and ‘negative externality’?”
agnitio
cpworthington
dant03
goonix
metrosideros
rauparaha
Robbie Allan
stevedoogue
Matt Nolan
The visible hand in economics 
July 23, 2008 at 4:48 pm
I can see how this strategy would work. The problem in my mind is that this is not a repeated game. The hot Italian would need to have prior knowledge of her strategy for it to work OR there would need to be a large enough proportion of woman with this strategy.
What is a mans optimal strategy?