I am ignoring the commission aspect of the service, because in practice there often isn't any. Tips are frequently pooled, meaning all three servers in your hyp

I am ignoring the commission aspect of the service, because in practice there often isn't any. Tips are frequently pooled, meaning all three servers in your hypothetical would end up with the same cut of the day's take regardless of their personal performance. Besides, if muffin vendors want to incentivize their staff with a commission scheme, why not just incentivize their staff with a commission scheme? Why force the general public to do it (badly) for them? And the idea that eliminating tips would be "jacking up" prices is exactly the line of faulty reasoning that tips are designed to exploit. The muffin already costs 20% more than the number on the little plaque in front of it claims. Without tips the same amount of money would leave the customer's pocket and the employer and employee would still ultimately split the proceeds from that sale the same way. No prices actually change, but the numbers become a lot more honest and simpler for all parties to reason about. The truth is vendors don't want prices to be simple to reason about because when they're difficult to reason about the other actors in the system will, on average, tend to make mistakes of reasoning in the vendor's favor.