I've always been of the school of thought that it is the responsibility of the person paddling out to take one on the head in order to stay out of the way of the guy that's dropping in. Usually it's going to be pretty obvious which way the guy intends to go. It's the paddleouters (yes, I just made that word up) duty to paddle towards the peak, not the shoulder so he or she doesn't disturb the ride. If that means you get axed in the head, you get axed in the head. Additionally, do NOT ditch your board in this circumstance. Duck dive and hope for the best. If you don't know how, learn.
dude I don't know why this is as common as knowing not to cut some one off, for g-d sakes, if someone is on a wave, paddle towards the foam and go under it. I always see people paddle in the direction of which the dude is surfing, and its so dumb. kooks!
i agree with most things, but theres some situations with the shore breaks where i sometimes look up after duck diving a few, and my buddy will be staring at me about to paddle. this is where there is no peak, no set wave coming in. i'll start booking it away from him/and out and if he sees the wave start breaking in my direction, he stops. if not, he continues. i believe that what he does in that situation, and what i do, seem to be the appropriate steps to avoid anything. but once again this is in shorebreak and without a consistent place for breaking waves