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Focal points for giving

Author

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  • Cross, Jeffrey
  • Zhang, Guangli

Abstract

Leveraging the unique context of New York City taxi rides, we estimate that passengers are more likely to tip a suggested amount when presented with an integer tip suggestion, which also corresponds with an increase in average tip rates. We show that these results are not driven by rounding heuristics and are consistent with integers acting as focal points instead of left-digit bias. Focusing on a 2012 rate fare change that increased the probability of integer tip suggestions by 700%, our estimates imply a transfer from riders to drivers of approximately 250,000 dollars in 2013.

Suggested Citation

  • Cross, Jeffrey & Zhang, Guangli, 2024. "Focal points for giving," Journal of Economic Psychology, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:joepsy:v:102:y:2024:i:c:s0167487024000370
    DOI: 10.1016/j.joep.2024.102729
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    References listed on IDEAS

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    More about this item

    Keywords

    Integers; Defaults; Tips; Suggestions; Taxi; Focal points;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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