Hot or Not? Rating Chicks at bars and the notion of Collective decisions – Field study

Me and my college mates were thinking of ways to kill time, this Friday evening. And we decided to play a simple game. Each of us would take turns in spotting a member of the opposite sex, and we would rank her purely on her appearance. Then we would compare our scores and see who was the biggest fan and who was the harshest critic. I consolidated the scores and the results are quite interesting.

Rationality of choice and preferences were introduced long back. Adam Smith was of the notion that each individual/entity is driven by his/their own preferences. Each of them take decisions which will maximize their outcome, and collectively the economy of Suppliers and Consumers moves towards an efficient equilibrium. Also famously known as the “Invisible hand”, forms the foundation of microeconomics.

The reason why the above mentioned idea works, is that each of us have our own unique preferences, which may or (quite often) may not be similar to the rest of the group. However, preferences and perceptions can be changed over time by peer influence, societal changes, information, advertisements, etc.

Firms know this. Hence they can group similar consumers together, and based on their willingness to pay, form the demand curves.A homogenous perfect group implies that any individual can effectively represent the entire group.

 I have always been been fascinated by the uniqueness in individual perception, and how groups are formed. A lot of key societal decisions and policies are formed on group consensus. What interests me is the variance of the group decision versus the optimal individual decision, and how it influences society, people and the economy.

Now back to to the fun part.

Let me first describe the raters here. It is 4 of us, each in our mid 20s, with a similar educational background (a college degree in engineering) , similar professions (Banking, Technology, Finance) but from 4 competing MNCs. We will call them, LD, PJ, AS and RK. We managed to select 16 subjects to rate. And each individual was subjected to a diligent discussion before the final ratings were given (on a total of 10).

Average 6.1 5.2 4.7 5.6 5.4
Highest 8.0 8.0 6.5 9.0 7.6
Lowest 3.5 1.0 2.0 1.5 2.9
Range 4.5 7.0 4.5 7.5 4.8

LD, on an average gave a score of 6.1/10 to the subjects, with a high of 8/10 and a lowest of 3.5/10. RK gave an average of of 5.6/10 with his highest being 9/10 to a certain individual and lowest 1.5/10.
Where RK and PJ represent a highly critical group, with a variance of 7+ between their best and the last. LD and AS had a more consistent rating, with a moderately extreme opinions.

Now let us drill down into the scores, in a descending order of their averages.

# Subjects LD PJ AS RK AVG Highest Lowest
1 MW 7.5 8 6 9 7.6 RK AS
2 SH 7.5 7.5 6.5 6.5 7.0 PJ Tie
3 RB 5.5 7 6.5 8.5 6.9 RK LD
4 NS 6 8 6 7.5 6.9 PJ Tie
5 DB 6.5 6 6 8 6.6 RK Tie
6 RBB 8 6.5 5 6 6.4 LD AS
7 SN 6 6 5.5 7.5 6.3 RK AS
8 DK 8 5 5 6 6.0 LD Tie
9 PB 6.5 5 4 5.5 5.3 LD AS
10 MK 7.5 4.5 4 3 4.8 LD RK
11 AD 5 7 3 3 4.5 PJ Tie
12 LM 5.5 3 5 5 4.4 LD PJ
13 AN 4 3 5 4.5 4.1 AS PJ
14 TR 3.5 1 4 5.5 3.5 RK PJ
15 AG 6.5 2 2 2 3.1 LD Tie
16 BM 4 4 2 1.5 2.9 Tie RK
The highest group average went to MW ~7.6/10 and lowest to BM, where the scorers were quite consistent in their preference.

Table Highest Table Lowest Variance
LD 6 1 0.7
PJ 3 3 (0.2)
AS 1 4 (0.7)
RK 5 2 0.2
Tie 1 6
16 16
Let us look at the table toppers. LD gave 6 high scores closely followed by RK. AS gave 4 lowest score, followed by PJ.

So who do you think was the best judge? Do you see a certain bias in scores of some select individuals? Is there inconsistencies in the group v.s. individual preference? Do you think not all of the judges were equally Rational?

As I work more on the analysis. You would notice, there are 2 subjects who are statistical outliers. One benefited a lot from the irrationality of the judges and the other got the harshest result :)

Why does check splitting cause people to spend more?

Friends or colleagues who dine together at restaurants commonly split the bill. This is a lot easier compared to consolidating each one's 'right' share.

Back in days when I was still a vegetarian, I would find this practice highly unfair since chicken kebabs and roasted pork is lot more expensive than fried rice and lentils. Thus check splitting often does lead to disproportionate distribution of bill. But apart from this, there is yet another consequence.

It gives everyone an incentive to spend more than if each had dined and paid separately. Why does this happen?

Let's talk about the concept of perceived value again. Say I am dining with 5 friends and we have decided to split the bill in the end. I am trying to make up my mind between mac n cheese listed at $10 and a lasagna at $20. Assuming my perceived value/willingness to pay for the lasagna is $15. That is, for me the lasagna gives me $5 of additional benefit compared to the former. But any price more than $15, I am better off ordering the former.

Had I been dining alone, I would have settled for the Mac n cheese. However, I know that since I am sharing the bill with 5 others, my marginal increase in share is just $2 (one fifth of the additional $10) which is still lower than the incremental $5 benefit. Thus I will order the lasagna.

Economist call such decisions inefficient as my $3 benefit is against a -$8 for the rest of the 4 diners, giving a net group benefit of -$5, resulting due to my decision of ordering a more expensive dish.

Then why do people still split their bill? Simple. Imagine if each of us do the same (with/without anticipating similar behavior by the rest). All 5 of us order more expensive dishes than we initially intended. The Result would be a larger total bill but also a smaller nett surplus loss. Each of us would benefit from our actions and lose from the rest's. It is still inefficient since now on an average you may end up paying more. Also depending on what item each ordered some could really gain and some lose.

The other obvious reason is the convenience that check splitting brings in.

So do you like splitting bills or paying your own share? Do leave your comments. Happy dining!

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Why do women endure high heels?

High heels are painful and make walking uncomfortable. Prolonged use can injure the feet, knees and back. Then why do they continue to wear them?

A rational explanation is to look at the subsequent benefit realized for the incurred cost. The benefits are quite apparent. "Men like an exaggerated female figure", writes fashion historian Caroline Cox in "Stilleto" where she describes the compelling lure of the needle heel.

Women in heels are more likely to attract favorable notice. In addition to making women taller, high heels force the back to arch thus accentuating the female form.

The problem is that height and appearance is a relative phenomenon and if all women wear high heels, such advantages tend to cancel out. It may be advantageous to be a few inches taller than before, but the relative height distribution is unaffected. So no one appears taller than if all had worn flats.

For fun, let's model this in game theory. Taking the simplest case of 2 women- Betty and Jane. The four possible options for (Betty, Jane) are (Flats, Heels), (Heels, Flats), (Heels, Heels) and (Flats,Flats).

Interestingly, game theory gives us  two optimal solutions to this problem. Either both wear high heels and nullify each others relative advantage or collectively decide to wear flats and stop enduring the pain.

Thus collectively if all women in the world decide to forgo high heels, they are all better off than before. Rationally, the latter is a better solution since they don't endure the pain for no incremental advantage.

But then why do we still see them wearing high heels?
Firstly, not everyone thinks like an economist. Collective decisions are nearly impossible since each one is driven by their own personal incentives, and any individual can gain relative advantage by violating the collective consensus by wearing heels. At least for a short period of time, till everyone realizes they need to follow suit to nullify their disadvantage.
Secondly, well, women are just too darn hard to understand :)

So why do you wear heels? Please do leave your comments