Focal Points for Giving

Abstract

Leveraging the unique context of New York City taxi rides, we estimate that passengers are more likely to tip a suggested amount when presented with an integer tip suggestion, which also corresponds with an increase in average tip rates. We find this behavioral response to integer suggestion varies by tip menu placement, fare amounts, deviation to social norm tip rate, and whether or not the total is also an integer. We show that these results are not driven by rounding heuristics and are consistent with integers acting as focal points instead of left-digit bias. 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 approximately 250,000 dollars in 2013.

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