American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Default Tips
American Economic Journal: Applied Economics
(pp. 1–19)
Abstract
We examine the role of defaults in high-frequency, small-scale choices using unique data on over 13 million New York City taxi rides. Using a regression discontinuity design, we show that default tip suggestions have a large impact on tip amounts. These results are supported by a secondary analysis that uses the quasi-random assignment of customers to different cars to examine default effects on a wider range of fares. Finally, we highlight a potential cost of setting defaults too high, as a higher proportion of customers opt to leave no credit card tip when presented with the higher suggested amounts.Citation
Haggag, Kareem, and Giovanni Paci. 2014. "Default Tips." American Economic Journal: Applied Economics 6 (3): 1–19. DOI: 10.1257/app.6.3.1Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- L92 Railroads and Other Surface Transportation