Strategic Behavior and Social Norms in Tipped Service Industries
AbstractTipping is a multi-billion-dollar phenomenon that traditional economic theory finds hard to explain. Why do people leave money as tips when service has already been provided? Two main potential reasons are that tipping is a social norm, and a strategic behavior aimed to assure good future service. A game-theoretical model is developed which allows the analysis of how tipping behavior should depend on patronage frequency if strategic motivations affect tipping. Thus, the model provides predictions that can be combined with empirical data on tipping behavior to answer the fundamental question, why do people tip?
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.
Volume (Year): 8 (2008)
Issue (Month): 1 (March)
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Web page: http://www.degruyter.com
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- Azar, Ofer H., 2009. "Tipping motivations and behavior in the US and Israel," MPRA Paper 20304, University Library of Munich, Germany.
- Azar, Ofer H., 2011. "Business strategy and the social norm of tipping," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 515-525, June.
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