Cash or Card? Social Image Concern and Restaurant Tipping Behavior

Abstract

Existing literature in economics and psychology has documented that individuals care about their social image. However, most of the existing evidence is based on laboratory experiments, where the concern for social image is artificially induced. We hand-collect a unique data set on restaurant tipping and use the mode of payment to discriminate between social-image-concern and other possible motivations for tipping in a naturally occurring environment. The social-image-concern hypothesis predicts that consumers will tip more frequently when paying by cash, relative to paying by a credit card, because their tipping behavior can be publicly observed and enables them to foster a positive social image. We find that both the probability of tipping and the dollar value of the tip is significantly higher when paying by cash, which is consistent with the social-image-concern hypothesis.