5 ms·

I'd love to hear from the HN community reasons that make this one a good system, and hope to not generate too much of a religious war.

raganwald 14y ago
You ask reasonable questions, the problem (like anything else involving disrupting an existing practice) is implementing it. You can’t just go around not tipping, in the hopes that decent waiters will start demanding higher wages from their employers. I mean, you can, and you’ll save some money, but you won’t change the system by yourself. Also, your objection to paying a percentage of the bill is not the strongest point in the article. It’s true that Fedex charge me the same money to deliver an envelope containing a contract worth $10,000 as they do to deliver a birthday card worth $5. They would probably love to charge me more for the contract, that would help them with price discrimination. But since they can’t peek at the contents of the envelope, they try to find a proxy for value in the form of speed of delivery. Rush service costs more, ostensibly because the sooner you need it, the more valuable it is and the more you’re willing to pay. Sometimes, that’s way off like with a birthday card you’re trying to get delivered in time for a birthday, but on the whole the system is good enough. Likewise with tipping. Forget about trying to value the service by the cost to deliver it. The system is trying to charge you what you can afford, and the amount you spend on the food is close enough to make things work out most of the time. The entire system is sitting in a local maximum that’s good enough for most purposes. If you try to deviate a little, you’ll end up with worse outcomes for everyone. You need a dramatic and disruptive change to the entire thing to move it to another local maximum. I encourage you to think of this as an exercise in startup business planning. Imagine there was a YC company that “fixed” the system. What product or service would it provide and how would it extract value from the current inefficiencies?
- masklinn 14y ago
  > You ask reasonable questions, the problem (like anything else involving disrupting an existing practice) is implementing it. It really isn't that hard: remove "tipped staff" exceptions to US labor laws and everybody will adjust quite fast. > The entire system is sitting in a local maximum that’s good enough for most purposes. If you try to deviate a little, you’ll end up with worse outcomes for everyone. Do you really? That seems to be an assertion based on absolutely no foundations.
  - twoodfin 14y ago
    It really isn't that hard: remove "tipped staff" exceptions to US labor laws and everybody will adjust quite fast. Many waiters in high end restaurants are paid more than minimum wage, but you're still expected to tip.
  - raganwald 14y ago
    Try not tipping and returning regularly to the same restaurant. Do you get a better outcome? If you’re a waiter, try negotiating a higher salary with your employer in exchange for telling diners that they need not tip. How does your salary negotiation work out? You could try opening a restaurant, paying higher wages, and telling patrons they needn’t tip. It might work out for you. What I personally think will happen is that someone will notice that you charge approximately 15% more than your competition to cover your higher labour costs. In effect you’ll be just like those places that impose a mandatory “service charge” on meals. So someone will figure it out and write a blog post saying how much they hate mandatory service charges and you should let them decide whether to pay less than 15% if the service is terrible. And we’d be back to square one.
- twoodfin 14y ago
  What product or service would it provide and how would it extract value from the current inefficiencies? Tipping compensates for a restaurant owner's lack of information about the quality of her staff's effect on her business. If she were certain that a particular server was repeatedly producing highly satisfied customers who were likely to return or recommend the establishment to their friends, it would be in her best interest to pay that server more to retain his services. The trick would be getting this feedback in a way that saves the customer from a 10-20% markup. Yelp reviews occasionally capture servers' names, but that's not likely to produce a useful sample, even putting aside all the usual problems with social review sites. One could imagine some sci-fi mood monitoring technology that could tell the owner in real time which patrons were satisfied or agitated, and that data could be correlated to the server, the chef, the size of the bill... The middle ground would be creating a low-friction, high-reliability scoring mechanism. But it can be hard to get honest feedback when the customer's money isn't on the table.
  - deleted 14y ago
    [deleted]

raganwald 14y ago

You ask reasonable questions, the problem (like anything else involving disrupting an existing practice) is implementing it. You can’t just go around not tipping, in the hopes that decent waiters will start demanding higher wages from their employers. I mean, you can, and you’ll save some money, but you won’t change the system by yourself. Also, your objection to paying a percentage of the bill is not the strongest point in the article. It’s true that Fedex charge me the same money to deliver an envelope containing a contract worth $10,000 as they do to deliver a birthday card worth $5. They would probably love to charge me more for the contract, that would help them with price discrimination. But since they can’t peek at the contents of the envelope, they try to find a proxy for value in the form of speed of delivery. Rush service costs more, ostensibly because the sooner you need it, the more valuable it is and the more you’re willing to pay. Sometimes, that’s way off like with a birthday card you’re trying to get delivered in time for a birthday, but on the whole the system is good enough. Likewise with tipping. Forget about trying to value the service by the cost to deliver it. The system is trying to charge you what you can afford, and the amount you spend on the food is close enough to make things work out most of the time. The entire system is sitting in a local maximum that’s good enough for most purposes. If you try to deviate a little, you’ll end up with worse outcomes for everyone. You need a dramatic and disruptive change to the entire thing to move it to another local maximum. I encourage you to think of this as an exercise in startup business planning. Imagine there was a YC company that “fixed” the system. What product or service would it provide and how would it extract value from the current inefficiencies?

masklinn 14y ago
> You ask reasonable questions, the problem (like anything else involving disrupting an existing practice) is implementing it. It really isn't that hard: remove "tipped staff" exceptions to US labor laws and everybody will adjust quite fast. > The entire system is sitting in a local maximum that’s good enough for most purposes. If you try to deviate a little, you’ll end up with worse outcomes for everyone. Do you really? That seems to be an assertion based on absolutely no foundations.
- twoodfin 14y ago
  It really isn't that hard: remove "tipped staff" exceptions to US labor laws and everybody will adjust quite fast. Many waiters in high end restaurants are paid more than minimum wage, but you're still expected to tip.
- raganwald 14y ago
  Try not tipping and returning regularly to the same restaurant. Do you get a better outcome? If you’re a waiter, try negotiating a higher salary with your employer in exchange for telling diners that they need not tip. How does your salary negotiation work out? You could try opening a restaurant, paying higher wages, and telling patrons they needn’t tip. It might work out for you. What I personally think will happen is that someone will notice that you charge approximately 15% more than your competition to cover your higher labour costs. In effect you’ll be just like those places that impose a mandatory “service charge” on meals. So someone will figure it out and write a blog post saying how much they hate mandatory service charges and you should let them decide whether to pay less than 15% if the service is terrible. And we’d be back to square one.
twoodfin 14y ago
What product or service would it provide and how would it extract value from the current inefficiencies? Tipping compensates for a restaurant owner's lack of information about the quality of her staff's effect on her business. If she were certain that a particular server was repeatedly producing highly satisfied customers who were likely to return or recommend the establishment to their friends, it would be in her best interest to pay that server more to retain his services. The trick would be getting this feedback in a way that saves the customer from a 10-20% markup. Yelp reviews occasionally capture servers' names, but that's not likely to produce a useful sample, even putting aside all the usual problems with social review sites. One could imagine some sci-fi mood monitoring technology that could tell the owner in real time which patrons were satisfied or agitated, and that data could be correlated to the server, the chef, the size of the bill... The middle ground would be creating a low-friction, high-reliability scoring mechanism. But it can be hard to get honest feedback when the customer's money isn't on the table.
- deleted 14y ago
  [deleted]