Why Do We Tip?
A while back, I got into an interesting online discussion of tipping, in particular restaurant tipping, a practice that some people approve of and others don't. I offered what I think of as the standard economic explanation--that it was a way of rewarding waiters for good service (with high tips) and penalizing bad service (with low tips). It depends on social norms or repeat custom to work, but takes advantage of the fact that the customer has information about the quality of the service that the employer does not have.
The problem with that explanation, as a number of people argued, is that it depends on customers substantially varying the amount of their tip—and many, perhaps most, don't. If you almost always tip 15% and occasionally raise it to 20% for good service or lower to 10% for poor, that isn't much of an incentive to the waiter.
It occurred to me that there was another possible explanation, having to do with the customer rather than the waiter. People like to feel generous. Giving a tip when you know you don't have to makes you feel better than paying the same amount on the bill. People like to feel honest and honorable. Abiding by the implied contract to tip if you get reasonable service, when you know you could have stiffed the waiter and saved the money (provided you don't plan to come back to that restaurant), gives you a chance to prove to yourself and your table companions that you are an honest and honorable sort.