551 research outputs found
Tipping, firm strategy, and industrial organization
No full textTipping is a phenomenon that has been studied for many years, but is receiving increased attention in recent years. The magnitude of tips is very large – in the US, for example, tips in the food industry alone amount to about $42 billion each year, and tips are given in many other establishments and countries, so annual worldwide tips are much higher than that. Millions of workers in the US alone derive most of their income from tips and tipping is prevalent in numerous countries and occupations. These are all good reasons to study tipping, but it is clear that tipping has created much interest also because it is puzzling from a theoretical perspective. The common assumption in economics that people maximize utility (which is derived by consuming various goods) subject to a budget constraint implies that people should give up money only when they receive something in return. This is not the case, however, when people tip: service has already been provided by the time the tip is given, so the tip is a voluntary payment that does not buy something real (such as improved service) in return. The literature on tipping can be divided to two main areas. The first area can be termed "understanding tipping behavior." This includes studies that try to understand why people tip, what affects their tipping behavior, why tipping is different across countries, etc. The second research area, which started to receive attention more recently, can be defined as "tipping, firm strategy, and industrial organization." This part of the literature deals with the effect of tipping on firms and markets. For example, firms can sometimes choose between voluntary tipping and compulsory service charges – which one is better for the firm? How should the existence of tips affect optimal pricing by the firm? How should firms monitor workers and provide incentives to them when tipping exists? Why does tipping exist in some industries but not in others? Does tipping increase social welfare in industries in which it is the norm? All these questions belong to this second research area and demonstrate the close relationship of tipping to industrial organization and firm strategy. Several review articles made an attempt to summarize and synthesize the extensive literature in the area of understanding tipping behavior, but no article has offered an extensive literature review that focuses on the area of "tipping, firm strategy, and industrial organization." The purpose of this paper, therefore, is to review and summarize the literature in this area of research.tipping; firm strategy; business strategy; industrial organization; social norms; norms; restaurants; waiters; servers; the service industry; tips; gratuities; strategy
Evolution of social norms with heterogeneous preferences: A general model and an application to the academic review process
No full textThe article presents a model of social norm evolution, which suggests how the increase in optimal and actual first response times (FRT) of economics journals can be related. When the optimal FRT and the norm about how much time refereeing should take increase, it seems that the existence of a norm increases the average refereeing time. The model suggests the surprising result that this is not necessarily true. I also discuss applications of the model in other contexts, differences in the optimal FRT between disciplines, the effects of the FRT on the tenure process, and strategic behavior of referees.social norms; evolution; first response times; refereeing; academic publishing; turnaround times; journals; review process
The Social Norm of Tipping: A Review
No full textTipping is an important phenomenon, both because of its economic magnitude and because of the insights it suggests about economic behavior in general. It is closely related to several areas in economics, including labor economics, industrial organization, social economics, behavioral economics, and public policy. Unfortunately, no published article integrates and synthesizes the research on tipping. This makes it hard for scholars to get an overview of this research area without reading dozens of articles. The purpose of this article is therefore to give the readers the state of the art in the research on tipping. In addition to summarizing and synthesizing the previous research on tipping, the article includes many original ideas and suggests topics for future research.Tipping; Social norms; Consumer behavior
The Academic Review Process: How Can We Make it More Efficient?
No full textRecently many editors try to reduce the turnaround times of academic journals. Shorter turnaround times, however, will induce many additional submissions of low-quality papers, increasing significantly the workload of editors and referees, and the number of rejections prior to publication. I suggest several ideas how editors can shorten turnaround times and four ideas how they can still avoid frivolous submissions, thus improving the review process efficiency: higher submission fees; requiring authors to review papers in proportion to their submissions; using differential editorial delay – letting low-quality papers wait more; and banning papers from being submitted after a certain number of rejections.Academic publishing, first response times, editorial process, review process, refereeing
DOES RELATIVE THINKING EXIST IN REAL-WORLD SITUATIONS? A FIELD EXPERIMENT WITH BAGELS AND CREAM CHEESE
No full textMany experiments show that consumers consider relative price differences even when only absolute price differences are relevant from an economic perspective, a phenomenon that was denoted "relative thinking." These experiments, however, were conducted using hypothetical questions. To test whether the relative thinking bias also exists in real-world situations, a field experiment where subjects could purchase either a bagel or a bagel with cream cheese was conducted. The monetary addition for the cream cheese was kept constant (0.05 in one treatment and $0.30 in the other). Relative thinking then implies that more people should add the cream cheese when the bagel's price is higher, because the relative price increase for the cream cheese is then smaller. However, the results did not document any relative thinking – more people (in percentage of those who purchase) added the cream cheese when the bagel's price was lower (the difference between the treatments, however, was not statistically significant). A replication of the experiment as a hypothetical-scenario experiment did document relative thinking, suggesting that introduction of financial incentives might alleviate relative thinking.Relative thinking; Experimental economics; Field experiment; Financial incentives; Behavioral economics; Product differentiation.
Who Do We Tip and Why? An Empirical Investigation
No full textAn important question about social norms is whether they are created to increase welfare; I address it by examining the characteristics of tipped and non-tipped occupations. Tipping prevalence is negatively correlated with worker’s income and consumer’s monitoring ability and positively with consumer’s income and closeness between the worker and the consumer. The results refute a common belief that tipping exists to improve economic efficiency by lowering monitoring costs. Tipping, however, is more prevalent when consumers feel empathy and compassion for workers and want to show gratitude for good service, suggesting that tipping might increase welfare if welfare includes psychological utility.Tipping, Service industries, social norms, social welfare, behavioral economics, feelings, emotions
Relative Thinking Theory
No full textThe article presents a theory that I denote “Relative Thinking Theory,” which claims that people consider relative differences and not only absolute differences when making various economics decisions, even in those cases where the rational model dictates that people should consider only absolute differences. The article reviews experimental evidence for this behavior, summarizing briefly several experiments I conducted, as well as some earlier related literature. It then discusses how we can think about relative thinking and formalize this behavior. Later, the article addresses several related questions: why do people exhibit relative thinking, whether it is beneficial to do so, and whether experience and education can change relative thinking. Finally, the article explains why firms seem to respond to relative thinking of consumers, and raises additional implications of relative thinking for economics and management.Relative thinking, relative differences, behavioral decision making, behavioral economics, psychological economics, Weber's law, absolute differences, percentages, ratios
The Review Process in Economics: Is it Too Fast?
No full textRewards for publications in good economics journals are very high, while submission fees and other monetary costs associated with submitting an existing manuscript are low. Consequently, the editorial delay (especially the first response time – the time until the first editorial decision), by postponing monetary rewards to publication, constitutes the major submission cost (from the author’s perspective). Reducing the delay will induce many additional submissions of low-quality papers to good journals, increasing significantly the workload of editors and referees. Moreover, the rejection rate will increase and cause papers to be rejected more times prior to publication, offsetting at least some of the shorter first response times. As a result, the efforts of many editors to reduce the editorial delay, while attracting more submissions to their journals, may have adverse effects from a social perspective, and the optimal delay might be longer than the current average of four months.Review process, refereeing, publishing, academia, research, first response times, academic review process
Behavioral industrial organization, firm strategy, and consumer economics
No full textThe field of behavioral economics is one of the fastest-growing fields in economics in recent years. Not long ago this was a small field, but over the last decade or so, the field gained more recognition, and today it seems clear that psychological motivations and biases affect economic behavior in many important ways. Insights from psychology were incorporated in several areas of economics. This paper offers a short review of the application of behavioral economics to industrial organization, which can be denoted “behavioral industrial organization,” and on the relationship between behavioral industrial organization, firm strategy, and consumer economics.industrial organization; behavioral economics; strategy; firm strategy; business strategy; economic psychology; behavioral industrial organization; consumer behavior; consumer economics
Interview with Azar Nafisi
No full textIranian author Azar Nafisi speaks about her experiences and the themes of women's rights and struggle that motivate her work including her famous memior Reading Lolita in Tehran. She also shares her thoughts and feelings on the 40 year fight for women's rights in Iran
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