Archives for signaling



An Economist’s Tipping Strategy

I have a friend with whom I regularly eat out at restaurants and from time to time we disagree on how much to tip.  Traditionally, I have been a hard-wired 20% tipper.  But since studying the racial effects of taxi-cab tipping, I’ve been more attracted to tipping less – sometimes closer to 15%.  This has at times created disagreements between my friend and I on how much to tip.  He always wants to tip 20%.  But when we’ve disagreed, we’ve always resolved the issue by tipping the larger amount.  We always split the bill—including the tip—50/50. 

But a few weeks ago, my friend and I were eating dinner and experienced exceptionally bad service.  The server twice put in the wrong order and charged us for items that we had not ordered.  I suggested that we reduce our tip to 10% (I note that while I’m high maintenance in many aspect of my life, I’m not persnickety about restaurant service and the last time I reduced my tip to 10% was probably more than 1000 restaurant meals ago).  My friend agreed that the server had made these errors (and indeed, the sever himself acknowledged that the service was subpar),  Nevertheless, my friend still wanted us to leave a 20% tip.  Read More »



Question of the Day: Is Pot Smoke a Good Signal?

From a reader named Ben Doty:

Quick question that may benefit from an economist’s perspective, possibly relating to complimentary goods, signaling, expertise, and education:

If you walk into a surf shop and the stench of marijuana nearly knocks you over, does that make you more or less likely to purchase surfing lessons there?

What do you say, readers? I have never been in a surf shop myself; I have, however, been in the pro shop at various golf courses and I can tell you that I have never once smelled marijuana there.



Honor vs. Time

I just got a letter saying the American Economic Review was including me in a published list of exceptionally diligent referees.  I suppose I should be proud, but this “honor” has problems.  It is a signal to other editors that could increase the demands on my time.  Worse still, it indicates that I view my time as having relatively little value; and in so much of modern American society, signaling a high value of time (seeming very busy) is a status symbol.  The only virtue is that, being very senior in my profession, this additional signal adds very little new information for most observers. One friend requested that I be one of four people doing a tenure review on an assistant professor; and, after I agreed, the friend wrote back, “I have no doubt that I’ll get your review first.”

(HT: PG and MR)



A Rose is a Rose is a Preference Signal

A rose by any other name is just as sweet, isn’t it? Even virtual roses used in Korean online dating experiments. In a new working paper by main author Soohyung Lee of the University of Maryland, economists studied the impact on preference signaling – signals sent to a select few.

In the study, a major online dating company in Korea organized dating events with 613 participants, half men and half women. Everyone was given two free “virtual roses” that they could attach to an e-mail to a fellow participant, and a few were given 8 virtual roses. Although these roses cost nothing, attaching a rose to an e-mail drastically increased rates of acceptance, even among different “desirability” groups. Read More »