They do have an economic explanation that makes sense. They’re a form of price discrimination, where some people pay more for a product that is potentially only marginally different. For example, the steep price increase for various storage sizes of iPhones. Price discrimination can be a good thing. In the case of iPhones, it allows Apple to put out a base model at a lower price than it would to make the same profit without price discrimination. In the restaurant industry, it is probably good for both consumers and wait staff. Tipping culture allows restaurants to keep the base price of a meal lower, and allows wealthier customers to tip heavily. At nicer restaurants, it’s not uncommon for wait staff to make a healthy amount in tips.

It's a very weird form of price discrimination though, because the service you receive doesn't change depending on how much you tip.

The economic choice for the customer is, how much do they value their money versus not being an asshole...

Pay what you want can be seen as a form of price discrimination: https://www.sciencedirect.com/science/article/abs/pii/S22148....

That's the point: the offering changes are marginal (you get some extra storage space on your phone; you get PX status at the restaurant) but wealthy patrons will behave differently than price-sensitive patrons, and you want to extract the maximum value from both market segments.

Do you think that given the choice, workers would prefer tips and an unlivable wage, above a livable wage and no tips?

Many servers have opposed efforts to replace tips with a “living wage” (because servers and bartenders can make $20-30/hour with tips). Back of house staff tend to lose out from that system, so they tend to favor eliminating tips.

And you think this hold true for the average worker, rather than the pretty obvious exceptions that make $20-30/hour?

Every friend I have who is a waiter or bartender make over 15 per hour and many around 30.

When I asked if they'd prefer wages even if they made the same per hour, every single one said they prefer tips.

I don't know if it's true, but I recall reading somewhere that working class people tend to tip Uber drivers more, because "they know what it's like" to have that kind of job.

If so, that's a really twisted form of price discrimination.