Wednesday, 12 May 2010

Market failure watch: Adverse selection at the buffet table

“The aim of this study was to investigate whether the eating behaviors of people at all-you-can-eat Chinese buffets differs depending upon their body mass. The resulting findings could confirm or disconfirm previous laboratory research that has been criticized for being artificial.
METHODS AND PROCEDURES: Trained observers recorded the height, weight, sex, age, and behavior of 213 patrons at Chinese all-you-can-eat restaurants. Various seating, serving, and eating behaviors were then compared across BMI levels.
RESULTS: Patrons with higher levels of BMI were more likely to be associated with using larger plates vs. smaller plates (OR 1.16, P < 0.01) and facing the buffet vs. side or back (OR 1.10, P < 0.001). Patrons with higher levels of BMI were less likely to be associated with using chopsticks vs. forks (OR 0.90,P < 0.05), browsing the buffet before eating vs. serving themselves immediately (OR 0.92, P < 0.001), and having a napkin on their lap vs. not having a napkin on their lap (OR 0.92, P < 0.01). Patrons with lower BMIs left more food on their plates (10.6% vs. 6.0%, P < 0.05) and chewed more per bite of food (14.8 vs. 11.9, P < 0.001). DISCUSSION: These observational findings of real-world behavior provide support for laboratory studies that have otherwise been dismissed as artificial.”

The main puzzle isn't how the researchers managed to measure how many times the patrons chewed each bite of food; rather, it's why prices manage to induce a pooling rather than separating equilibrium: we don't see only Mr. Creosote at the buffet table.

Candidate explanations:
  • Low consumption consumers with a strong preference for diversity within a meal? But then surely there would be buffets for them with smaller plates and "Seconds ok, thirds bad" rules.
  • Strongly risk averse customers with appetite uncertainty? Highly implausible.
  • Lots of places have lunch buffets rather than dinner buffets: time then serves as constraint on customers, and folks who can eat a lot quickly pool with folks in a big hurry to eat and willing to pay a premium for a speedy meal. I like this one, but buffet dinners still exist.
  • The buffet is loss-leader for overpriced drinks. But then we'd expect high appetite folks happy with water as drink to drive a similar result
  • Restaurants tend to be frequented by groups that will include both low and high appetite types. But isn't there evidence of some sortition of friend groups along BMI? And even absent sortition, wouldn't friend groups with highest average appetites be most likely to choose a buffet for the group?
  • Quantity and quality preferences are negatively correlated: the high consumption folks eat a higher proportion of cheap starches and carbs while the low consumption folks eat a higher proportion of more expensive meats? The study makes no mention of high versus low cost item proportions, but it seems plausible. Mr. Creosote was so odd because he wanted all of the really high quality stuff mushed together in a bucket, after all...
  • Restaurant margins are high enough that losses on the high demand customers don't matter much. This seems implausible given rather low margins in this market; and, in that case, wouldn't we expect entry with cream-skimming (again, a small-plates buffet with perhaps no more than one allowed refill)?
  • Rules allowing them to kick out or refuse seating to high demanders; of course, then there are the lawsuits by those whose rapacity knew no satiety. I've never seen anyone outside of the Simpsons actually kicked out of a buffet; it's been years since I've been to one though.
Other explanations welcome!


  1. I just can't believe anyone got funding for that study.

    People who have a higher BMI tend to be people who eat more - WOW

  2. I'd be more interested in comparing average BMI across set of buffet and non buffet restaurants of similar cost to check for adverse selection....