To tip or not to tip: How tip jars impact tipping in the digital tipping era

Abstract

Digital tipping has become more prevalent in limited-service environments such as coffee shops, yet an interesting phenomenon is observed: many businesses still use physical tip jars while digital tipping prompts already exist. But why is that? This dissertation investigates tip jars as environmental norm cues and their interaction with digital tipping systems to influence customers’ tipping behavior in limited-service environments. The rise of digital payment technology has not only altered how people tip but also expanded where and to whom people tip. Meanwhile, business practitioners face uncertainty about whether and how they should request tips. They often employ conventional tipping tactics, such as tip jars, but the effectiveness remains unclear. Using a mixed-methods approach, including three lab experiments, one field experiment, and in-depth interviews, this dissertation provides robust evidence on how the presence and content of tip jars (e.g., empty vs. full) affect decisions to tip and tip amounts. It further explores how practitioners interpret evolving tipping norms and incorporate them into their daily operations. Chapter 1 discusses the history of tipping, the development of tipping research, and the emergence of digital tipping, providing a comprehensive overview of the literature. Chapter 2 presents the theoretical framework and hypotheses development. Chapter 3 reports the findings from both quantitative and qualitative data. The results indicate that the presence of tip jars doesn’t affect customers’ decision to tip; rather, consumers’ beliefs about tipping norms drive this decision. The content of tip jars, however, impacts tip amounts: an empty jar elicits higher tips than a full jar or no jar, and reciprocity partially mediates this effect. The effectiveness of tip jars is also context-dependent, highlighting the moderating role of rapport. Interview results provide context for interpreting and understanding these findings. Chapter 4 discusses the theoretical contributions and outlines practical implications for businesses to navigate tipping requests. Chapter 5 addresses limitations and directions for future research. Overall, this dissertation investigates how environmental cues and perceived tipping norms impact customers’ tipping behavior in the digital era, providing novel insights that help scholars and businesses better understand the evolving tipping phenomena.