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Strategic Behavior and Social Norms in Tipped Service Industries

Author

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  • Azar Ofer H

    (Ben-Gurion University of the Negev)

Abstract

Tipping is a multi-billion-dollar phenomenon that traditional economic theory finds hard to explain. Why do people leave money as tips when service has already been provided? Two main potential reasons are that tipping is a social norm, and a strategic behavior aimed to assure good future service. A game-theoretical model is developed which allows the analysis of how tipping behavior should depend on patronage frequency if strategic motivations affect tipping. Thus, the model provides predictions that can be combined with empirical data on tipping behavior to answer the fundamental question, why do people tip?

Suggested Citation

  • Azar Ofer H, 2008. "Strategic Behavior and Social Norms in Tipped Service Industries," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-18, March.
    • Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:7
    DOI: 10.2202/1935-1682.1778
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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. Azar, Ofer H., 2011. "Business strategy and the social norm of tipping," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 515-525, June.
    3. Cross, Jeffrey & Zhang, Guangli, 2024. "Focal points for giving," Journal of Economic Psychology, Elsevier, vol. 102(C).
    4. Lynn, Michael, 2015. "Explanations of service gratuities and tipping: Evidence from individual differences in tipping motivations and tendencies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 55(C), pages 65-71.
    5. Lynn, Michael, 2015. "Service gratuities and tipping: A motivational framework," Journal of Economic Psychology, Elsevier, vol. 46(C), pages 74-88.
    6. Ge, Qi, 2018. "Sports sentiment and tipping behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 95-113.
    7. Azar, Ofer H., 2009. "Tipping motivations and behavior in the US and Israel," MPRA Paper 20304, University Library of Munich, Germany.
    8. Lynn, Michael, 2018. "How motivations for tipping vary with occupational differences in descriptive tipping norms," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 77(C), pages 1-10.
    9. García-Almeida, Desiderio Juan & Klassen, Norbert, 2017. "The influence of knowledge-based factors on taxi competitiveness at island destinations: An analysis on tips," Tourism Management, Elsevier, vol. 59(C), pages 110-122.
    10. Lynn, Michael, 2016. "Motivations for tipping: How they differ across more and less frequently tipped services," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 38-48.

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