More tips, fewer customers: Downstream consequences of higher vs. lower levels of default tipping options

What the paper says

This research examines customers’ responses to low (vs. high) levels of default tip suggestions (10%, 15%, 20% vs. 20%, 25%, 30%). Prior research finds that higher default levels increase tip amounts. This paper reveals that higher defaults have the opposite effect on consumers’ non-tip responses: they decrease non-tip responses like repatronage. Consumers’ perceived control over the tipping process mediates these effects. High defaults have similarly detrimental effects compared to sliding scale tip requests or not requesting a tip. The detrimental effects of high defaults are particularly strong for customers who are unfamiliar with tipping norms. We contribute to research on tipping and choice architecture by demonstrating that default levels affect non-tip customer responses in the opposite direction of payment amounts, and explaining when and why this effect occurs. Managers should be wary of adopting high defaults, particularly in unfamiliar tipping contexts, as doing so may negatively affect downstream customer outcomes. • Higher (vs. lower) default levels reduce non-tip responses, like WOM and repatronage. • Higher default levels reduce customers’ perceived control over the tip selection. • Default levels affect tip amounts and non-tip responses in opposite directions. • Effects of default level are strongest in unfamiliar tipping contexts. • High defaults reduce non-tip responses compared to sliding-scales and not requesting tips.