Tipping as risk sharing
Tipping is often dismissed as an exception to the assumption of rational economic agents. This paper describes situations where tipping is, in fact, an effective mechanism for risk sharing and welfare improvement. When risk-averse customers purchase a service with uncertain quality, tipping can reduce the customer's exposure to risk by making part of the price of the service discretionary. These findings help explain why we tend to tip restaurant workers but not retail workers and why some high-risk service providers, such as lawyers and automobile mechanics, are not typically tipped.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 38 (2009)
Issue (Month): 4 (August)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620175|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bernstein, Lisa, 1992. "Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry," The Journal of Legal Studies, University of Chicago Press, vol. 21(1), pages 115-57, January.
- Ofer Azar, 2005.
"Who do we tip and why? An empirical investigation,"
Taylor & Francis Journals, vol. 37(16), pages 1871-1879.
- Conlin, Michael & Lynn, Michael & O'Donoghue, Ted, 2003. "The norm of restaurant tipping," Journal of Economic Behavior & Organization, Elsevier, vol. 52(3), pages 297-321, November.
- Azar, Ofer H., 2007.
"Why pay extra? Tipping and the importance of social norms and feelings in economic theory,"
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics),
Elsevier, vol. 36(2), pages 250-265, April.
- Ofer H. Azar, 2005. "Why pay extra? Tipping and the importance of social norms and feelings in economic theory," Microeconomics 0503005, EconWPA.
- Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
- Frank, Robert H, 1987. "If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?," American Economic Review, American Economic Association, vol. 77(4), pages 593-604, September.
- Ofer H. Azar & Yossi Tobol, 2008.
"Tipping as a Strategic Investment in Service Quality: An Optimal-Control Analysis of Repeated Interactions in the Service Industry,"
Southern Economic Journal,
Southern Economic Association, vol. 75(1), pages 246-260, July.
- 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.
- Epps, Thomas W., 1981. "Necessary and Sufficient Conditions for the Mean-Variance Portfolio Model With Constant Risk Aversion," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 16(02), pages 169-176, June.
- Ofer H. Azar, 2003.
"Optimal Monitoring with External Incentives: The Case of Tipping,"
- Ofer H. Azar, 2004. "Optimal Monitoring with External Incentives: The Case of Tipping," Southern Economic Journal, Southern Economic Association, vol. 71(1), pages 170-181, July.
- Ofer H. Azar, 2005.
"The Social Norm of Tipping: Does it Improve Social Welfare?,"
- Ofer Azar, 2005. "The Social Norm of Tipping: Does it Improve Social Welfare?," Journal of Economics, Springer, vol. 85(2), pages 141-173, 08.
- Lynn, Michael & McCall, Michael, 2000. "Gratitude and gratuity: a meta-analysis of research on the service-tipping relationship," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(2), pages 203-214.
- Ofer H. Azar, 2007. "Do people tip strategically, to improve future service? Theory and evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 40(2), pages 515-527, May.
- Ofer H. Azar, 2003.
"What sustains social norms and how they evolve? The case of tipping,"
- Azar, Ofer H., 2004. "What sustains social norms and how they evolve?: The case of tipping," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 49-64, May.
- Ofer H. Azar, 2003. "The Social Norm of Tipping: A Review," Others 0309006, EconWPA.
- Lynn, Michael & Zinkhan, George M & Harris, Judy, 1993. " Consumer Tipping: A Cross-Country Study," Journal of Consumer Research, University of Chicago Press, vol. 20(3), pages 478-88, December.
When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:38:y:2009:i:4:p:641-647. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.