Date of Award
2024
Document Type
Honors Thesis (Open Access)
Department
Colby College. Economics Dept.
Advisor(s)
Erin Giffin
Second Advisor
Tim Hubbard
Abstract
Despite tipping being an extremely common economic decision for today’s consumers, little is known about how tip amounts are incorporated into conceptions of final cost. I explore how consumers think about tipping as a component of overall cost in a counter-service restaurant (CSR) setting in which tips are not based on the quality of service received. Results of an online survey indicate that even when participants are aware that they will have to tip on an item, less than half of them (47%) actually implement this knowledge into their expectation of the final cost of their purchase. Furthermore, individual differences in motivations and attitudes for leaving tips provide insight into whether consumers would tip at a CSR, with consumers who prioritize rewarding and taking care of servers being more likely to tip in this scenario. In addition, these same consumers tend to prefer being afforded the option to supply their own tip (split-cost structure) as opposed to having all costs be incorporated into the menu price for them (combined-cost structure). These results serve as a foundation for research on tipping at CSRs and provide important considerations for restaurant owners and policymakers considering the wages of workers in the service industry.
Keywords
economics, tip, behavioral economics, experimental economics, consumer behavior
Recommended Citation
Wims, Haley, "Gratuity's role in final cost: An economic assessment of tipping" (2024). Honors Theses. Paper 1448.https://digitalcommons.colby.edu/honorstheses/1448