> if having the customers being able to punish unhelpful staff increases the odds of having returning customers, that would increase the likelihood of Uber drivers being better paid under competition.

Doesn't the rating system approximate this outcome well enough, though? Being able to rate a driver, and see the overall rating before I get in the car is of huge value to me as a customer. Feeling obligated to tip is a net negative for me.

In a restaurant (in the US at least) it's so expected to tip that if you tip lower than 15% for terrible service you're considered cheapskate. Even though Uber's tipping will presumably be anonymous-ish (assuming they implement it like Lyft has), I would still feel that social pressure.

Oh, I forgot about rating! It indeed should act in the same way as tipping, but not necessarily to the same degree. It's possible, for instance, that the change on a the driver's earnings conditional on any new rating is lower than the tip that he'd get from a new trip. Even more so as a driver's rating is the average rating from all his recent trips.

If pulls a 5-star service for 499 customers and a 0-star service for a single customer (for whatever reason) his rating drops from 5 to 4.99, which doesn't seem that relevant. Unless a 0.01 drop in his rating means a loss in earnings greater than that of a lost tip, the tipping system would provide better rewards for not dropping the ball.

Forgot about the social pressure, too (I'm not American). That could be a real issue, because if people don't actually consider not tipping then it's just dead as a incentive scheme. They'd have to make tipping anonymous.

By the way, I don't think pressure under anonymous choice is "social". You could attribute it to education and thus society and some way but ... that's rather roundabout. I think the more appropriate term is "consciousness".

Yes, I also believe that, in the US at least, the social pressure distorts the signal that the tip sends so it's meaningless. There is such a huge stigma associated with not tipping (or tipping poorly), that most people will tip a decent amount even for poor service.

Granted, the rating system is no better, even if for different reasons: since Uber/Lyft will deactivate drivers if their rating falls below what I'd consider to be a fairly high value (something above 4), most people (where I live, at least) give 5 stars unless there was something seriously wrong with the ride, so a mediocre driver will get the same rating as an exemplary driver.