Tipping illustrates the importance of social norms in motivating economic behavior. People tip because this is the social norm and disobeying norms results in social disapproval that creates emotional disutility. Tipping is also economically important: in the United States alone, millions of...

The paper presents a model of the evolution of social norms. When a norm is costly to follow and people do not derive benefits from following it except for avoiding social disapproval, the norm erodes over time. Tip percentages, however, increased over the years, suggesting that people derive...

Tipping is a multi-billion-dollar phenomenon that challenges the traditional assumption of selfish economic agents who have no feelings and do not care about social norms. This article reviews the early history of tipping and offers an economic analysis of different aspects of tipping. Using the...

Tipping is a significant economic activity (tips in the US food industry alone amount to about $42 billion annually) that was claimed to improve service quality and increase economic efficiency, because it gives incentives to provide excellent service, and therefore allows to avoid costly...

Tipping is an important phenomenon, both because of its economic magnitude and because of the insights it suggests about economic behavior in general. It is closely related to several areas in economics, including labor economics, industrial organization, social economics, behavioral economics,...

Some economists believe that social norms are created to improve welfare where the market fails. I show that tipping is such a norm, using a model in which a waiter chooses service quality and then a customer chooses the tip. The customer’s utility depends on the social norm about tipping and...

Tipping is a multi-billion-dollar phenomenon that standard economic models find hard to explain. I discuss several aspects of tipping and divide tipping to six different categories: reward-tipping, price- tipping, tipping-in-advance, bribery-tipping, holiday-tipping and gift- tipping, and...