Paying for Integers

Abstract

Leveraging the unique context of New York City taxi rides, we estimate that passengers are 25 to 30 percentage points more likely to tip a suggested amount when presented an integer tip suggestion. Moreover, we nd this behavioral response to integer suggestion varies by tip menu placement, fare amounts and deviation to social norm tip rate. By combining our empirical results with a behavioral model, we nd that our results are consistent with integers acting as focal points for giving. Focusing on a 2012 rate fare change that increased the probability of integer tip suggestions by 700%, our estimates imply a transfer from riders to drivers of 1.3 million dollars in 2013.

Keywords: Integers; Defaults; Tips; Suggestions; Taxi; Focal Points

JEL Classification: I21, 124