The norm of restaurant tipping

Abstract

Using survey data, we identify a variety of factors that influence tipping behavior and in the process lay out a simple theoretical framework to help to interpret our empirical observations. We first investigate the efficiency of observed tipping behavior. While there are elements of efficiency—notably, percent tip depends on service quality—it does not appear fully efficient. We then posit a model in which customers trade off material well-being against disutility from not adhering to the norm, and we use this model to reinterpret initial empirical findings and make additional empirical predictions.