I once rented a house with four of my college friends. At first, everything felt like a utopia. We imagined cooking together, hanging out in the living room every night, and chipping in to buy household necessities. But in reality, just three months in, the house WhatsApp group was only filled with water gallon bills, electricity tokens, and passive-aggressive remarks about who finished the dish soap.

If you have ever experienced this, you know exactly how it feels. The splitting system in a friend group or shared house is highly prone to collapsing. Not because your friends are evil, but mathematically, you guys are trapped in what is called the Prisoner's Dilemma, one of the most fundamental concepts in Game Theory.

Here is how it works. Let us say there is an empty water gallon. You have two choices: Choice A (Cooperate): You take the initiative to walk to the store, buy the gallon with your own money, then write in the group to ask for reimbursement. Choice B (Defect): You pretend you are not thirsty, order an iced tea on delivery, and wait for someone else to buy the gallon.

According to Game Theory, the most rational option for an individual (Nash Equilibrium) is Choice B (Defect). Why? Because if you choose A, you put in physical effort and bear the risk of your money not being fully reimbursed (because there is always that one friend who replies "later man, have not withdrawn cash"). But if you choose B, and someone else chooses A, you get free drinking water without the effort.

The problem is, if everyone chooses B because they think it is rational, eventually the gallon remains empty and everyone dies of thirst. This is called the Tragedy of the Commons. Shared facilities always get destroyed because everyone wants to enjoy the benefits, but nobody wants to bear the maintenance cost.

So how do you hack the chipping-in system so it does not end in a cold war?

One, never use a manual reimbursement system. Writing "Gallon 20k, 5k each guys" in the group is a terrible algorithm. Someone will definitely forget, someone will pretend to forget, someone will miss the chat. The solution? Create a pool fund at the beginning of the month. Everyone must transfer a certain amount to a specific house bank account. If the gallon runs out, take the money from there. No drama of collecting small change. O(1) transaction time.

Two, implement an incentive and penalty system (Mechanism Design). If there is someone who diligently buys the gallon or cleans the bathroom, reduce their chipping-in portion next month. Give a reward for good behavior. Conversely, if someone is late paying the monthly due, change the wifi password and do not tell them. Force them to cooperate through the system, not through moral reprimands. Morality is subjective, the wifi password is absolute.

Three, reduce the variables of shared items. Do not chip in to buy rice, cooking oil, let alone body soap. The consumption rate of each person is different. Someone eats rice like a manual laborer, someone else is on a diet. Someone showers three times a day, someone else only showers when going to campus. If you split the cost, someone will definitely feel cheated. Let personal items be personal responsibilities. Chipping in should only be for absolute utilities: electricity, wifi, and drinking water.

The point is, do not rely on the kindness of your friends' hearts to run a communal system. Design your game in such a way that cooperating becomes the most profitable option for them.

Khay