'Nothing Matters': A '0' Tip Option Increases Consumers’ Voluntary Payments

Abstract

This research examines how the choice architecture of tip options used in screen-based payment collection systems affects consumers’ tipping behavior. Eight lab and field experiments show that consumers choose to avoid a numerical zero tip option (i.e., 0). Replacing the dominant opt-out default “No Tip” with 0% in a choice set, nudges people to opt-in to tipping. This effect is robust to bill size, ranges of alternatives, service level, order presentation of defaults and is mediated by self-image concerns. Furthermore, replacing a non-zero option (i.e., 1%, 5%, 10%) with 0% when a “No Tip” option is also present as an additional means of opting out, counterintuitively leads consumers to tip higher amounts. This work further builds on the survey method literature to show that the number 0 may not be used as a source of information to make tip judgments as this option is ignored. These results have theoretical implications for choice architecture, numerical cognition, prosocial behavior, and behavioral pricing. Importantly, these findings provide practical implications for consumer and labor welfare, and to businesses within the new age of the digital service economy.

Keywords: Choice Architecture, Numerical Cognition, Voluntary Payments, Behavioral Economics, Zero, Framing, Prosocial Behavior, Service Economy, Pricing

JEL Classification: M31