An investigation of tipping behavior as a major component in service economy: The case of taxi tipping

Abstract

Tipping is considered a thought-provoking economic practice since several factors have a role in determining the amount of tip that is left. This study aims to gain an in-depth understanding of tipping conduct within taxi industry. Initially a review of research on determinants of tipping is made. The particulars of tipping in taxi domain are scrutinized using real observations of 1482 taxi rides. The impact of factors that relate to the size of the taxi fare, interaction between the customer and the driver, status seeking, and gender are analyzed. It is found that total distance traveled during the taxi ride, making conversation with the customer, type of the taxi cab, customers’ clothing style, customers’ chosen seat and customers’ gender exert a significant influence on tipping behavior.