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An Analysis of the Determinants of Tipping Behavior: A Laboratory Experiment and Evidence from Restaurant Tipping

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  • Matt Parrett

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    (Deloitte Tax LLP)

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    Abstract

    This paper explores several determinants of tipping behavior. First, I consider two social norms explanations—reciprocity and letdown (guilt) aversion—of why consumers tip in restaurants. Second, I examine three aspects of the tipping situation that influence how much consumers tip in restaurants: table size, sex, and method of bill payment. I address these issues using two data sources: a field survey and laboratory experiments. Customers were surveyed individually as they left a set of restaurants in Richmond, Virginia. The laboratory experiments vary service quality, table size, and information about others' tips in a controlled setting. Results from both data sets show support for reciprocity and letdown aversion, and that tip size decreases with table size. Sex differences, which exist only in the experimental data, show that men tip more than women. Finally, the size of the tip does not depend on the method of bill payment.

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    Bibliographic Info

    Article provided by Southern Economic Association in its journal Southern Economic Journal.

    Volume (Year): 73 (2006)
    Issue (Month): 2 (October)
    Pages: 489–514

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    Handle: RePEc:sej:ancoec:v:73:2:y:2006:p:489-514

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    Cited by:
    1. Azar, Ofer H., 2012. "The effect of the minimum wage for tipped workers on firm strategy, employees and social welfare," Labour Economics, Elsevier, vol. 19(5), pages 748-755.
    2. Nejat Anbarci & Nick Feltovich, 2012. "How responsive are people to changes in their bargaining position? Earned bargaining power and the 50–50 norm," Economics Series 2012_2, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
    3. Nisvan Erkal & Lata Gangadharan & Nikos Nikiforakis, 2009. "Relative Earnings and Giving in a Real-Effort Experiment," Department of Economics - Working Papers Series 1067, The University of Melbourne.
    4. Caitlin Knowles Myers & Marcus Bellows & Hiba Fakhoury & Douglas Hale & Alexander Hall & Kaitlin Ofman, 2010. "Ladies first? A field study of discrimination in coffee shops," Applied Economics, Taylor & Francis Journals, vol. 42(14), pages 1761-1769.
    5. Cason, Timothy N. & Gangadharan, Lata & Nikiforakis, Nikos, 2011. "Can real-effort investments inhibit the convergence of experimental markets?," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 97-103, January.
    6. Azar, Ofer H. & Tobol, Yossi, 2006. "Tipping as a strategic investment in service quality: An optimal-control analysis of repeated interactions in the service industry," MPRA Paper 4393, University Library of Munich, Germany, revised 2007.
    7. Parrett, Matt, 2011. "Do people with food service experience tip better?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(5), pages 464-471.
    8. Eckel, Catherine & Gintis, Herbert, 2010. "Blaming the messenger: Notes on the current state of experimental economics," Journal of Economic Behavior & Organization, Elsevier, vol. 73(1), pages 109-119, January.

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