1 stanley seiden stanley yu econ 488 november 30, 2009 tipping behavior: an experimental approach
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Stanley SeidenStanley Yu
ECON 488November 30, 2009
Tipping Behavior: An Experimental Approach
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Question Addressed
How does tipping behavior change based on the information presented on the bill and customers' method of payment?
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Inspiration
Irrational behaviors Debit or credit card round the total (including tip) to
a whole number, even though there is no logical reasoning
Suggested tips Do people follow (strictly vs. as a guide)? Convenient or insulting?
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Background
Each year in the United States, diners leave some $42 billion in tips at full-service restaurants
Restaurants are now printing a “suggested gratuity” right at the bottom of the check. However, if you take a close look, you’ll see that restaurants are trying to bump up the tip by calculating the suggestion on the check total, not the total minus tax.
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Hypotheses
Bills with suggested tip amounts given will garner the largest tip amount across the three conditions Guilt Estimate based on post-tax suggested gratuity
For given price, longer receipt (more items) might yield higher tips Waiter is “doing” more
Paying with a card, people would be more likely to irrationally tip so the total amount comes to a whole dollar
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Results
13/22 participants (59%) tipped so total rounded to a whole number8/22 participants (36%) used at least one suggested tip amount as given
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Data 1
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Data 28
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Data 4
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Data 5
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Variance Observations11
Highest with cheap meals
Lowest with medium service
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Analysis
Results of expensive bill comparison deny hypothesis
Effects of suggested tip amount: Slightly higher tipping, but not by much Slightly more predictable tipping amount
Various irrational strategies common: High tipping with cheap bills Rounding Tipping in general lower than suggested tip amounts
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Takeaways
While this seems minor, it probably is. However, people should be aware that the suggested tip is not accurate if they are depending on it to tip appropriately
In small restaurants, intimacy is more important. Something as impersonal as a computerized “Tip Table” — especially a post-tax one — doesn’t foster that
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Limitations of Study
Limited sample size (22)Difficult to recreate complete dining
experience Many factors influence tip
Participants are not handing over their own money
There is the possibility that there is no consistent pattern to tipping in the real world!