Default Tips

Kareem Haggag and Giovanni Paci

American Economic Journal: Applied Economics, 2014, vol. 6, issue 3, 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.

JEL-codes: D12 L92 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/app.6.3.1
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Citations: View citations in EconPapers (26)

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