Wednesday, July 7, 2010

The Economics of Tipping

This paper by Azar offers a reasonably interesting and comprehensive classification of tipping schemes. A question that emerges is to identify other services where tipping is not the social norm. What are some examples? I don't tip at the the dry cleaners but do tip at the coffee place. Why?

Another suggestion offered in Azar's paper is to look at the Underground Economy more broadly. Tipping for services in the otherwise above ground economy can be considered as a bridge activity between the two worlds.