I’m on a blog break this week and all posts are reruns. The next new post will appear in the new year. This post originally appeared on 4 June 2009 on The Finance Buff. Visit the original post for comments.
Recently, my wife, friends, and I went into The Big City on a beautiful spring evening to see Leonard Cohen in concert. It was a superb show and a splendid night. The concert began at 8PM, as did many other theatrical and musical events in the area. Like many others, we were in the market for pre-theater dinner.
We arrived downtown around 6:30PM and found the restaurants packed with lines out the doors. We put our name on the list at a Malaysian establishment and were told it’d be a twenty minute wait. We killed the time with a stroll and then returned to wait for our table. By 7PM we were still waiting and I began to get concerned. I don’t like to rush through dinner but it seemed like we’d have little choice.
To take my mind off my concern, I began to observe the parties that were seated but seemed to be finishing, or had finished, their meals. They all seemed needlessly slow and casual. Some checked their watches. A few double checked that they had their theater or concert tickets. I saw an economics problem.
Those who were nearly done eating had an hour to kill before their shows. Their objective was to kill the time, which they could do by stretching out their dining experience. Those of us who were waiting to eat had the opposite problem: we would have to use that hour efficiently to eat and get to the theater on time.
The economist in me thought, “If only I could walk up to one of these slow-pokes and offer them some money to give up their table we could all be made better off.” Perhaps someone done with his meal would gladly accept $10 to move on. I probably would have been happy to spend that much to get the table more quickly. But there is no such market, not because it is illegal, but because nearly everyone would consider it gauche. We just don’t do that sort of thing, at least not in America, or not in The Big City anyway.
With more time to kill I contemplated the implications of such a market. A table auction might break out. The proprietors might participate to increase turnover. The incentive for early diners would be to linger longer in order to take advantage of the premium on tables that would occur about one hour before show time. How unpleasant and stressful I would find such a market!
Thus, I convinced myself that a market for tables based on financial transaction would not be helpful. The current market, driven by social norms and etiquette works quite well and, perhaps, could not be improved upon. As I completed my thought experiment about pre-theater diner table auctions the host led us to our seats. It was a good, albeit quick, meal and the price for the seat was just right.