Tipping is an interesting economic behavior because it is an expense that consumers are free to avoid. Although called for by social norms, tips are not legally required. Furthermore, since tips are not given until after services have been rendered, they are not necessary to get good service in establishments that are infrequently patronized. Moreover, it is a behavior that is difficult for neoclassical theory to explain. At the individual level of analysis, people leave tips even when they are infrequent patrons of a
service establishment and are unlikely to encounter the same service worker again. Furthermore, individuals’ decisions about how much to tip are affected by a host of variables unrelated to service levels. Thus, explanations for this behavior must go beyond the neoclassical idea that people base tips on service quality to ensure good service in the future. Adequately explaining individuals’ tipping decisions requires a more behavioral
approach – one that broadens the traditional consumer utility function to include desires to avoid guilt, obtain social approval, obtain status, treat others equitably, and help others as well as one that recognizes cognitive capacity, knowledge, mood, and other cold, cognitive processes as having a causal impact on economic decision making and behavior.
