How the qualities of cash affect negotiation, tipping, spending, and saving

© 2021 Jay ZenkicCash is still crucial to billions of people world-wide. Despite this ubiquity, research on money has predominantly focused on the question of quantity (how much money?) over the question of quality (what kind of money?) when determining how money is used. Yet, some evidence suggests that the quality of money, and the qualities of cash in particular, matter to people’s behaviour. Given the practical importance of cash and the potential for important conceptual contribution, I examine how the qualities of cash—its form and physical properties—affect its fundamental uses: negotiation, tipping, spending, and saving. This thesis contains three papers and fifteen experiments examining how the qualities of cash affect usage behaviour. In paper 1, I show that people consider the quality of the money in a negotiated offer just as they consider quantity. Specifically, I find that people even reject 50:50 financial splits (equal quantity) when they are to receive inferior money (i.e., smaller denominations) relative to their negotiation partner (who receives larger denominations) at a greater rate than when both receive money of the same quality (i.e., same denomination). I thereby open up an avenue for a new line of research on how the quality of resources affects fairness perceptions in negotiations and provide practical guidance for negotiators. In paper 2, I examine how smaller and larger denominations affect consumer tipping. In finding that consumers are less likely to tip with smaller (vs. larger) denominations, I contribute support for a reversal of the denomination effect to the literature on the physical characteristics of money, the potential for embarrassment as an inhibitor to tipping, and actionable guidance on how tipping can be encouraged to improve the financial wellbeing of service workers. Finally, in paper 3, I identify and establish an entirely new qualitative factor of cash that affects consumer behaviour. Specifically, I examine how the two fundamental physical forms of cash—coins and banknotes—affect consumer spending and thereby also their saving. In finding that coins are more of a pain to keep than equivalent banknotes, I contribute the pain of holding as a counterpoint to the pain of paying, advancing the form (coins vs. banknotes) of cash as an important determinant of spending behaviour to literature on the physical characteristics of cash. The pain of holding is furthermore identified as a novel reason for under-saving. The aggregate findings of these papers emphasise the importance of the qualities of cash to financial decision-making, contribute to the literatures on the physical characteristics of money, the pain of paying, embarrassment, and fairness, and have important practical implications for the vast number of people receiving and using cash on a day-to-day basis across a variety of contexts