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

  • Matt Parrett

    ()

    (Deloitte Tax LLP)

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    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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    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
    Contact details of provider: Web page: http://www.southerneconomic.org/
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