Frank and Wanda, sunk costs and punishment

Consider my friends Frank and Wanda. Frank’s a frugal fellow. Wanda, on the other hand, is wasteful. Understandably, Frank and Wanda do not get along well. As their mutual friend, I decided to take them both to dinner to see if they could settle their differences amicably. Here is a modified transcript of their conversation as we neared the end of dinner.

Frank: Wow, I’m full. That was a fantastic meal.

Wanda: Sure was. I’m stuffed.

Frank: What? You’re already finished? Look at your plate! You’ve still got a long way to go!

Wanda: Man, I’m full. Let’s go.

Frank: At least get a doggie bag.

W: And reheat this? Ewwww…

F: But…you’ll waste the food!

(Editor’s note: At this point, I mentally slapped my forehead. Frank never says “waste” unless he’s spoiling for an argument. Was my dinner such a failure?)

 W: In a sense, it was already wasted when I ordered it. The remaining food is of no value to me, so eating it is just as useless as tossing it. My decision to toss it does not confer less value to me, relative to eating it. So how is it a waste?

F: It’s not of no value. We’ve established that you can’t doggie-bag it, but if you gorge yourself now, you’ll eat less later. That means you’ll spend less money later. Isn’t that a benefit?

W: It would be, but I doubt gorging myself now will reduce my hunger for breakfast tomorrow. I’ll be just as hungry then as now. So what’s the point of eating ’til I burst?

F: Hmmm… I concede that there’s no short-term value in stuffing yourself. But as you said earlier, the food was wasted the moment you ordered it. You shouldn’t order as much food next time. Forcing yourself to overeat is a punishment! If you credibly commit to punishing yourself every time you overorder, you’ll be less likely to overorder.

W: A punishment? Why do I need that? I’ll just remember not to order too much food in the future.

F: Sure, that’s what everyone says when they’re about to get punished! But if you think about it, forced overeating is the perfect punishment for your particular vice. It’s unpleasant precisely to the degree that you sinned.

W: But what if I get used to overeating? Then I’ll continue to order tons of food. I’ll eat it, but I won’t need it. It’ll still be wasted.

F: Hmmm… Right again. Well, how about this: You have to pay a penalty for your wasted food. From now on, when we go out you have to pay a fee for every bit of food left on your plate.

W: But then my incentive will be to clean my plate. Like I just said, I might just get used to eating more. What we want is an incentive to order less food in the first place.

F: Ah, then let’s raise the price of food. You pay double.

W: Deal.

That’s how the dinner ended–amicably, just as I’d hoped.

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