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The indirect effects of tipping policies on patronage intentions through perceived expensiveness, fairness, and quality

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  • Lynn, Michael
  • Wang, Shuo

Abstract

Many service firms allow their employees to be directly compensated by customers via the institution of tipping despite the fact this practice exposes firms to substantial risks, such as collusion between employees and customers against the firm. This paper examines a potential reason businesses may accept these risks. Specifically, it reports on a study finding that voluntary tipping policies increase potential demand by reducing perceived expensiveness, increasing perceived tipping policy fairness, and increasing a-priori expectations of service quality.

Suggested Citation

  • Lynn, Michael & Wang, Shuo, 2013. "The indirect effects of tipping policies on patronage intentions through perceived expensiveness, fairness, and quality," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 62-71.
    • Handle: RePEc:eee:joepsy:v:39:y:2013:i:c:p:62-71
    DOI: 10.1016/j.joep.2013.07.003
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Stefan Gössling & Sébastien Fernandez & Carlos Martin-Rios & Susana Pasamar Reyes & Valérie Fointiat & Rami K Isaac & Merete Lunde, 2020. "Current Issues in Tourism Restaurant tipping in Europe: a comparative assessment," Post-Print hal-02546589, HAL.
    2. Were Simon O. & Miricho Moses N. & Maranga Vincent N., 2020. "A Study into the Relationship between Restaurant Tipping and Food Service Tangibility in Kisumu County, Kenya," European Journal of Tourism, Hospitality and Recreation, Sciendo, vol. 10(2), pages 190-199, December.
    3. ChihChien Chen & YangSu Chen, 2017. "The impacts of different types of cuisines and restaurants on gratuities," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(2), pages 154-173, April.
    4. Lynn, Michael, 2016. "Why are we more likely to tip some service occupations than others? Theory, evidence, and implications," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 134-150.
    5. Azar, Ofer H. & Yosef, Shira & Bar-Eli, Michael, 2015. "Restaurant tipping in a field experiment: How do customers tip when they receive too much change?," Journal of Economic Psychology, Elsevier, vol. 50(C), pages 13-21.
    6. Inda PREMORDIA & Timea GÁL, 2021. "Negative Online Customer Reviews In Restaurant Dining Experience: What Are The Determining Factors Of Service Failure Affecting Behavioral Intentions?," Network Intelligence Studies, Romanian Foundation for Business Intelligence, Editorial Department, issue 17, pages 69-83, June.
    7. Damon Alexander & Christopher Boone & Michael Lynnb, 2021. "The Effects of Tip Recommendations on Customer Tipping, Satisfaction, Repatronage, and Spending," Management Science, INFORMS, vol. 67(1), pages 146-165, January.
    8. Chu, Wujin & Lee, Jeongmin & Baumann, Chris & Kang, Christine, 2020. "Fairness perception of ancillary fees: Industry differences and communication strategies," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    9. Johannes Voester & Bjoern Ivens & Alexander Leischnig, 2017. "Partitioned pricing: review of the literature and directions for further research," Review of Managerial Science, Springer, vol. 11(4), pages 879-931, October.
    10. Melville Saayman & Andrea Saayman, 2015. "Understanding Tipping Behaviour — An Economic Perspective," Tourism Economics, , vol. 21(2), pages 247-265, April.
    11. Frank, David G. & Lynn, Michael, 2020. "Shattering the Illusion of the Self-Earned Tip: The Effect of a Restaurant Magician on Co-Workers’ Tips," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    12. Cabano, Frank G. & Attari, Amin, 2023. "Don’t tell me how much to tip: The influence of gratuity guidelines on consumers’ favorability of the brand," Journal of Business Research, Elsevier, vol. 159(C).

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    More about this item

    Keywords

    M10; M50; D03; D10; L80; Z13; M52; 3000; 3920; 3900; Tipping; Employee compensation; Pricing; Consumer perceptions; Fairness;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D10 - Microeconomics - - Household Behavior - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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