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Many people give to charity and leave tips. What prediction does traditional economic theory make about each of these activit
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Charity - Traditional economics

Reciprocity

To further their own cause or self interest, people give in to charity. For certain people it is difficult to take up cause even if they want to as the economic costs are high, hence charity is cheaper option.

Tipping - Traditional economics

Long run improvement in service quality

A game theory arguments holds that everyone tipping is better than no one tipping as tipping improves service quality as one person behavior influences other to behave the same way

Behavioral Economics - theory of conformity

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