Do people tip strategically, to improve future service? Theory and evidence

A central question about tipping is whether people tip strategically, to improve future service, or only because tipping is a social norm. I present a theoretical model that incorporates psychological utility associated with tipping (because it is a social norm) and allows tipping to be motivated also by future service considerations. The model predicts that if future service is a reason for tipping, the sensitivity of tips to service quality should be higher for repeating customers than for non‐repeating ones. Surveys of 597 restaurant customers are analysed and suggest that future service is not a reason for tipping.