The tipping point: Testing the impact of unfamiliar currency on international tourists' tip size

Purpose: While tipping is a well-documented domestic phenomenon, the cognitive mechanisms driving the gratuity behaviours of international tourists remain under-explored. This study investigates how the nominal face value of an unfamiliar currency systematically biases international tipping through the anchoring-and-adjustment heuristic. Design/methodology/approach: Grounded in the money illusion framework, we conducted four experiments across laboratory settings and high-traffic field intercepts. To isolate the ‘pseudo-magnitude effect’ from budget-based variables, the research design standardized real economic value across all conditions. Destinations for the initial studies were strategically selected for their low familiarity to ensure a purified test of currency anchoring. Findings: Results demonstrate a robust bidirectional bias. When the destination currency unit is a fraction of the home unit (e.g., 1 Home Unit = 0.4 Destination Units), tourists over-tip in real terms due to low-nominal anchoring. Conversely, when the currency is a multiple (e.g., 1 Home Unit = 80 Destination Units), a ‘pseudo-magnitude effect’ triggers underspending, as high nominal values act as a cognitive proxy for excessive cost. Mediation analysis reveals that these biases are not driven by perceived calculative effort, suggesting that the nominal anchor triggers an automatic response that remains insufficiently adjusted. Originality/value: This research contributes to the hospitality literature by identifying transactional fluency as a critical boundary condition for social exchange. It extends money illusion theory by demonstrating that the nominal unit itself (independent of real value or destination prestige) dictates the magnitude of social reciprocity in international tourism. Practical implications: The study provides actionable insights for global hospitality managers regarding choice architecture. By understanding these cognitive distortions, practitioners can implement digital payment presets (e.g., percentage-based prompts) or bill-framing strategies to mitigate multiple-currency underspending, thereby ensuring equitable compensation for service staff in international hubs.