The obvious economic explanation is that tipping provides a way in which the customer's information on quality of service can be used to reward good service and penalize poor. That explains why tipping is not limited to unusually good service; if the tip for average service is zero, the customer cannot reduce it further to punish unusually poor service.
This explains why we should tip but not why we do. A regular customer at a restaurant may regard the benefit as a private good, an incentive not to provide good service but to provide good service to him. But that does not apply to the passenger in a taxi, who is unlikely to ever see the driver again, or to the traveler who eats at a different restaurant every night. Yet they too tip.
Looking at the practice from the perspective of tipper rather than tippee suggests a different sort of explanation. By tipping we demonstrate, to ourselves and others, our willingness to adhere to social norms, even at some cost. And at the same time we get the pleasure of generosity.
Not only do we get to be generous, we get, in an odd sense, to be generous for free. If tipping were not customary restaurants would have to pay their waiters more. Instead of paying $11.50 for dinner in a world without tipping I pay $10 plus a $1.50 tip. I could stiff the waiter and save $1.50, so not doing so lets me feel both honest and generous, but on average my dinner costs me no more than it would if tipping were not customary.
This may explain why tipping is less common in Europe. Europeans, judging at least by my casual observation, are more concerned than Americans with issues of class and status. What an American sees as an opportunity to demonstrate his honesty and generosity, a European may see as a way of claiming superior status--the diner playing the role of the aristocrat tossing crusts to starving peasants. I think that fits the tone of some exchanges on the subject I have seen online between Europeans and Americans.
Labels: norms status Americans Europeans