Wednesday, April 16, 2008

Do Prostitutes Get Tips?

Why or why not? I believe not based on the following limited evidence: 1) I see no mention of tipping in a skim-reading of the recent prostitution working paper by Levitt and Venkatesh; 2) In my first college course I sat next to a woman I later learned to be a prostitute, and she never mentioned it, although she apparently was a highly specialized sort.

So, assuming the norm is to not tip a prostitute following a trick, why is that the norm? Why would it be the case that a prostitute in the spirit of competition not offer potential Johns the opportunity to “pay” on merit after the transaction? I offer three explanations:

  1. The prostitution market suffers from adverse-selection, and Johns are more likely to stiff (pardon the pun) the ladies, making the dominant business model to offer an up-front fee.
  2. Consumers would prefer to pay up-front for psychological reasons. When I go to the restaurant and I am considering what the appropriate tip should be, I go through sort of a mental checklist: How was the service? How difficult was I? Did my kids spill drinks on the ground? Did my wife make a complicated order that required lots of amendments? I imagine that Johns would prefer not to reflect on what they just did with a similar checklist just like they may avoid a mirror for some time.
  3. Prostitutes can capitalize on a systematic male-ego bias by making them pay first. The male ego says “$xxx sounds reasonable for the hours I am about to have with her” only to then spend a considerably shorter time. If they tipped after the fact they would be tipping on a shorter duration than they would have paid for up-front.

I’m sure others have great ideas and I look forward to reading any of them in the comments.

7 comments:

Matt E. Ryan said...

I'm presuming that the tip is worked into the agreed upon ex ante price, and given this fact, I'm fairly certain you'd want someone bargaining with the act immediately on the horizon as opposed to immediately in the rear view mirror.

Tipping afterwards when eating always seemed awkward to me. Tipping very well at a crowded bars genuinely works well because bartenders know they can get rewarded for treating certain customers with preference. The shirking aspect of paying afterwards always seemed to be a large hurdle to a well functioning market for service...but apparently seems to work pretty well, though I've never worked as a waiter or bartender. When I ask stories about tips, it's usually when they get stiffed, not when they get an inordinately large tip.

David said...

My impression has been that tipping arises when employers have high costs to observing highly variable employee performance. Often, the consumer can observe performance much easier. It seems like this is not a problem faced by two individuals (one often self-employed).

Will Luther said...

Presuming that the additional risk added as a result of the transaction taking place in the informal sector pushes the price up, I would expect up-front prices to be closer to actual willingness to pay. Thus, reducing the consumer surplus one would tip out of.

To test this, you would want to see if customers tip when prostitution is legal. I am guessing they do. Of course, this could be validating the adverse selection claim as well since legal establishments might bring out a different crowd.

Viagra Online said...

I had been a night-walker and I think that the tips are a real things in the world !! I think that the number one is true because "see no mention of tipping " is so common in the normal life!!22dd

yatesspain.blogspot.com said...

This will not succeed in fact, that's what I suppose.

Colleen Rivera said...

My impression has been that tipping arises when employers have high costs to observing highly variable employee performance. Often, the consumer can observe performance much easier. It seems like this is not a problem faced by two individuals (one often self-employed).

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