English, Article edition: Incentives and service quality in the restaurant industry: the tipping-service puzzle Ofer Azar

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Bookmark: http://trove.nla.gov.au/version/51350
Physical Description
  • article
Language
  • English

Edition details

Title
  • Incentives and service quality in the restaurant industry: the tipping-service puzzle
Author
  • Ofer Azar
Physical Description
  • article
Notes
  • Tipping is a significant economic activity (tips in the US food industry alone amount to about $42 billion annually) that was claimed to improve service quality and increase economic efficiency, because it gives incentives to provide excellent service, and therefore allows to avoid costly monitoring of workers. The article suggests that this common wisdom might be wrong. A simple model shows formally that tips can improve service only if they are sensitive enough to service quality. Empirical evidence suggests that tips are hardly affected by service quality. Nevertheless, rankings of service quality by customers are very high; the co-existence of these two findings is denoted 'the tipping-service puzzle,' and several possible explanations for it are offered.
  • RePEc:taf:applec:v:41:y:2009:i:15:p:1917-1927
Language
  • English
Contributed by
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