The Kind-Hearted Smart Aleck

I'm curious to see a study which compares and contrasts the pros and cons of tips (as far as tipping waiters, bartenders, etc.). When many Europeans visit the States, they're often times confused by the concept of tipping. In their native countries, the "tips" are already built in to the overall salary, which makes for a more consistent annual wage. When they hear how much waiters and bartenders make per hour here, they're often times shocked and ask how they live off that. That's when the waiter or bartender explains the concept of tipping. I guess my question is, which is the better method overall? I think the theory in this country is that people will work harder for the extra tip - the "bonus" at the end of his/her job. If he or she doesn't excel, they deservedly won't be tipped well and if they do excel, the tip will reflect that and continue to inspire them to excel day in and day out. However, how often is that the case? Regardless...