The cafeteria in the hospital where I work, has a half a dozen cashiers. The people queue up with their food and are directed to the next empty cashier by a dedicated line management director (who, for some reason, wears a doctor’s white coat as his uniform). This caused me to think about why the hospital – the catering services department in this case – felt that this type of signaling was necessary.
If there was ever a case where the traditional economic assumption of rationality is probably correct, it’s here. Consumers, who quite obviously don’t like to wait on long lines, have a very clear goal: to maximize their utility function of food consumption. They want to reduce the amount of time on line and maximize the time they can relax on their lunch break, socialize or get back to work if they need to. Information here is quite clear. The cashiers are set up in such a way that scanning the available cashiers will reveal the next available one. There are ropes clearly marking where individuals should stand, single file, to wait for a cashier. So why are they wasting resources on hiring a line manager, who’s sole apparent purpose is to tell the next person in line which cashier to go to?
Assuming that my employers are themselves rational and have compared the cost/benefit analysis of smooth operation with and without a line manager, I must assume that without the ‘central planning’ of the line, there would be enough disorder that it hurts diners’ experiences and therefore profits.
What this brings to mind is something fellow FS blogger, Robert Simione, said to me the other day about the economic assumption of rationality:
…[E]conomists label “rational agent” as someone who wishes to maximize their monetary gains (or whatever you wish to call their pool of money). I was thinking about where this assumption comes from, and… about how all through history, philosophers since Aristotle stated that everyone’s goal is to maximize their happiness. Then economists took this idea and consider the monetary value of various happiness costs, and they say: “People trying to maximize happiness is like people trying to maximize the use of their money.” So now I wonder, what if this idea, that “rational” people always try to maximize their general happiness, what if this idea isn’t true? …I think the Efficient Intentions Hypothesis is not always true, and I think that you are right, that we may not be particularly good at finding a path to optimal happiness.
This is an astute analysis that I want to take even further. Even if people are rational, are good at – or don’t even bother trying – maximizing their happiness (which doesn’t appear to be the case), individualist goals under self motivated behavior to reach some new happiness potential does not necessarily produce the most efficient outcomes in aggregate group behaviors.
Its like a story I picked up from Tyler Cowen from Marginal Revolution (via Jason Kottke and other sources). Individuals may choose the shortest route to their destination when driving, but this doesn’t necessarily produce the best outcomes for anybody. Everyone wants to take the shortest routes, but the resulting traffic slows everyone down (the solution, by the way, is to intelligently close certain roads). My cousin-in-law, who is a traffic engineer for the NYC-NJ Port authority, pointed out to me that this is why the NYC’s plan to cut off traffic in parts of Broadway in Times Square and Herald Square was such a good idea. Instead of being stuck in traffic, drivers must take multiple alternative routes through midtown Manhattan, which effectively relieves congestion (and leaves more room for pedestrians).
This is an analogous, though not exactly parallel, story to my line management problem. We have the problem of self interested behavior creating chaos, rather than the smooth order predicted by the invisible hand. But, unlike driving, lunch-goers can see all of their options and select the fastest route accordingly. In this case, picking the cashier with the shortest line prevents congestion at the other registers. It’s not as if consumers are picking out one register just because its the closest or has the most attractive cashier (though this could still be a problem). If people are acting rationally and have no problem acting upon their preferences, I would predict that no line manager should be necessary.
It remains a problem to know exactly how rational people are and if they have enough information to pick a route that maximizes their utility to their expectations. Automobile operators, particularly ones that are well informed about pure route distances but not traffic patterns, may not be entirely rational or have enough information to produce beneficial outcomes. I don’t believe this is true for a lunch line.
In economics, these problem exists, as well as the ever important fact that the central planner has even less information than the markets. So while the aggregate result of self-interested, irrational behavior may be chaos, the outcome may still be preferable than a planned economy under technocratic rule.