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Tipping Types

Tipping Types. A Study of Statistical Discrimination in Restaurants. Statistical Discrimination. Tipping Behavior in Service Industries. In particular… the Restaurant Industry. What We Are Looking At. Research Question:

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Tipping Types

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  1. Tipping Types A Study of Statistical Discrimination in Restaurants

  2. Statistical Discrimination. • Tipping Behavior in Service Industries. • In particular… the Restaurant Industry. What We Are Looking At Research Question: Is variation in tipping behavior consistent with statistical discrimination by restaurant servers?

  3. The LiteratureTipping Behavior & Statistical Discrimination Server performance has a significant, but very small, effect on the size of tips (Lynn, 2000). Two articles by Lynn (2003 & 2004) identify racial groups with tipping averages under the social norm. Mallinson & Brewster (2005) show stereotypes are often a result of positive self-image and negative other-image. Caution: self-fulfilling prophecy effect of statistical discrimination (Lippert-Rasmussin, 2007).

  4. The Data • Demographic: Roseville, CA. • Unit of Analysis: the host, or person paying the bill, of each table served. • All observations strictly observational.

  5. Age and Gender Distribution

  6. Racial Distribution

  7. Tip Percentage Histogram

  8. Hypotheses & Model • H0: βx= 0 • Ha: βx≠ 0 • Where X represents any characteristic theorized to have a significant effect on tipping behavior. • Model: Statistical Discrimination • Yi = βXi + εi • Where Y represents an unobserved characteristic and X is the observed characteristic.

  9. Regression Results

  10. Conclusion Observed characteristics have statistically significant, but very small, effects on tipping behavior. Considering the low r-squared, unpredictable variations will occur. Servers should only apply varied service levels on the margin, i.e. when constraints do not allow all tables to receive their highest level of service.

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