Firms increasingly rely on recruiters to find talent. Recruiters are typically paid using refund contracts, which specify a payment upon a successful candidate suggestion and hire, and a refund if a candidate is hired but leaves for any reason during an initial period of employment.
In this paper we demonstrate tips are sensitive to service quality even when future interaction is unlikely. Using a novel data set covering 150,000 hair salon appointments where customers can be observed over time, we are able to exploit variation in service quality and exogenous separation rates.