Tipping privacy: The detrimental impact of observation on non-tip responses

Abstract

Digital point-of-sale platforms disrupted the norm of privacy-while-tipping. Previous research indirectly suggests that firms can increase—or at least not decrease—tips by reducing tipping privacy. The effects of tipping privacy on non-tip responses, defined as customer responses subsequent to the tip selection, including repatronage and word-of-mouth, remain unexamined. Related voluntary payment contexts (e.g., donations) suggest consumers sometimes prefer public observability and other times prefer privacy. We examine how and why tipping privacy affects non-tip responses. A field study and four controlled experiments find that diminished tipping privacy reduces non-tip responses because customers feel less generous and in control. Allowing customers to change initial tip amounts mitigates these detrimental effects. Providing insight into the inconsistent effects of privacy on tips, we find that diminished perceived control increases tip amounts, while diminished perceived generosity reduces tips. Managers adopting privacy-reducing technologies and service scripts should consider the damaging effects on non-tip responses.