Sadhana Tadepalli

To Tip or not to Tip?: A Closer Look at Nudges

Started Aug. 5, 2022

Abstract or project description

As consumers in this market, we all unknowingly are pushed into financial decisions through “nudges.” Nudges are “any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives”(Thaler & Sunstein, 2008). Previous research has pointed out the presence of nudges in grocery stores: the more expensive products are kept at eye level while the cheaper products are kept toward the bottom of the shelf, “nudging” customers toward choosing the more expensive option. Along those lines exist defaults. Defaults are “pre-set courses of action that take effect if nothing is specified by the decision maker”(Thaler & Sunstein, 2008). In this research, I collected data to analyze how nudges and defaults impact tipping culture. Largely driven by social pressure and feeling judged, tippers are “nudged” into tipping more or less when they feel the attention of the cashier. From a cashier’s perspective, this study shows best practices to maximize tipping. However, to a consumer, it is a reminder that feeling judged is not necessarily a reason to tip higher: they are merely being “nudged.”