Working Papers

ABSTRACT

This research examines how the choice of options used in screen-based payment collection systems affects consumers’ voluntary payments in the form of tipping. One field experiment and six lab experiments show that having a numerical zero tip option (i.e., 0%) in the choice set, either replacing the default “No Tip” option as an opt-out option, or included along with the “No Tip” as an additional means of opting out, counterintuitively shifts consumers’ choices towards higher tip options, resulting in their giving higher tips compared to when only non-numeric zero tip options are present. When two opt-out options are present, consumers are significantly more likely to choose “No Tip,” as compared to “0%” option when they wish to opt out from tipping. This effect is observed for different bill sizes, with different ranges of default options, across service contexts, and when the “0%” option is compared to a nominally small numerical option (e.g., 1%). The effect is mediated through self-image and empathic concerns, indicating that “0%” nudges consumers to tip more due to both impression management as well as social considerations. These results add to the evidence that consumers use contextual information to generate a response, adding to the survey methods literature. They also have theoretical implications for nudging mechanisms, the numerical cognition, prosocial behavior, and the behavioral pricing literatures, as well as practical implications for businesses in the service industry.