Exploring The Impact Of Nudging In Digital Tip Recommendations … A Behavioral Perspective …Is 28% The New Normal?

Abstract

Consumer behaviour regarding giving tips, i.e., gratuities, has changed dramatically with the onset of the Covid 19 Pandemic, coupled with the increased use of digital payment platforms and devices, which has made it easier for businesses to prompt customers for tips, using preselected tipping recommendations, often starting at 18% or 20%. These digital payments have become increasingly prevalent across various payment platforms and touchscreen kiosks, which has streamlined the tipping process but also introduced new dynamics through tipping recommendations. Tipping prompts integrated into these systems expanded the contexts in which customers were asked to tip, potentially leading to increased pressure and a shift in tipping behavior. industries. This paper examines the influence of digital tip recommendations on customer tipping behavior, satisfaction levels, and the emergence of consumer guilt that was exacerbated by the onset of the Covid-19 Pandemic. the specific gap this paper tackles: “No prior study has isolated how escalating default ranges (e.g., 10–20 vs. 20–28%) alter both tip size and downstream loyalty.

Through a comprehensive analysis of empirical data gathered from surveys and experimental studies, this research elucidates the multifaceted effects of digital tip suggestions and empathy for service workers during the Covid-19 Pandemic, on customer behavior and emotions. The findings reveal intricate dynamics between digital tip recommendations and tipping behavior, indicating nuanced relationships with customer satisfaction levels. Additionally, the study uncovers the phenomenon of consumer guilt arising from digital tip recommendations, shedding light on a previously unexplored aspect of tipping interactions. This research contributes to both theoretical understanding and practical implications for businesses seeking to optimize customer experiences in the digital era.