659 - THE IMPACT OF GIFTS ON TIPS AND TIME SPENT IN RESTAURANTS: A FIELD EXPERIMENT

Session: D09S002 - Contextual Effects in Economic Decision-Making
AUTHORS:
Malcman Merav (Ruppin Academic Center ~ Emek Hefer ~ Israel) , Rosenboim Mosi (Ben-Gurion University of the Negev ~ Beer-Sheva ~ Israel) , Azar Ofer H (Ben-Gurion University of the Negev ~ Beer-Sheva ~ Israel) , Shavit Tal (Ariel University ~ Ariel ~ Israel)
Abstract text:
Tipping demonstrates that psychological and social motivations can be a substantial reason for economic behavior. Tipping is the main source of income for a large population of workers. Therefore, it is important for employers and waiters to increase the amounts patrons tip. Better understanding of tipping can therefore have practical implications for them. To provide additional insights about tipping, we conducted a field experiment in a restaurant. This study contributes to the literature by using unique conditions in order to study how complimentary dishes or beverages in a restaurant, manipulations that have not been examined previously, affect tipping and stay duration. Customers were given a free dish or beverage, either before or after the meal (in addition to a control group that did not receive a free item). The manipulations are also unique because the gifts given to the customers are food items of the restaurant, rather than external items. We analyze how the experimental manipulation and various additional variables affect the tip and the dining duration. The main findings indicate that the tip amount is significantly higher for higher bill amounts, when the bill is paid in cash, when the table is located in a more intimate section of the restaurant, and when a gift is given at the end of the meal. Gifts at the end of the meal increase tips significantly more than gifts at the beginning, consistent with the recency effect. Dining duration increased when customers were given a gift, when they paid the bill with a credit card and when the bill was higher. We conclude that tipping behavior is a strong norm but can be manipulated to some extent with substantial interventions.