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Fairness in Winner-Take-All Markets

Author

Listed:
  • Bjorn Bartling

    (University of Zurich)

  • Alexander Cappelen

    (Norwegian School of Economics)

  • Mathias Ekström

    (Norwegian School of Economics)

  • Erik Ø. Sørensen

    (Norwegian School of Economics)

  • Bertil Tungodden

    (Norwegian School of Economics)

Abstract

The paper reports the first experimental study on people's fairness views on extreme income inequalities arising from winner-take-all reward structures. We find that the majority of participants consider extreme income inequality generated in winner-take-all situations as fair, independent of the winning margin. Spectators appear to endorse a “factual merit†fairness argument for no redistribution: the winner deserves all the earnings because these earnings were determined by his or her performance. Our findings shed light on the present political debate on redistribution, by suggesting that people may object less to certain types of extreme income inequality than commonly assumed.

Suggested Citation

  • Bjorn Bartling & Alexander Cappelen & Mathias Ekström & Erik Ø. Sørensen & Bertil Tungodden, 2018. "Fairness in Winner-Take-All Markets," Working Papers 2018-031, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2018-031
    Note: MIP
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Bartling_Cappelen_Ekstrom_etal_2018_fairness-winner-take-all.pdf
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    References listed on IDEAS

    as
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    Cited by:

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    2. Fehr, Dietmar & Rau, Hannes & Trautmann, Stefan T. & Xu, Yilong, 2020. "Inequality, fairness and social capital," European Economic Review, Elsevier, vol. 129(C).
    3. Peter Andre, 2021. "Shallow Meritocracy: An Experiment on Fairness Views," CRC TR 224 Discussion Paper Series crctr224_2021_318v1, University of Bonn and University of Mannheim, Germany.
    4. Tobias König & Dorothea Kübler & Lydia Mechtenberg & Renke Schmacker, 2023. "Fairness in Matching Markets: Experimental Evidence," Rationality and Competition Discussion Paper Series 442, CRC TRR 190 Rationality and Competition.
    5. Granaglia, Elena, 2019. "Can market inequalities be justified? The intrinsic shortcomings of meritocracy," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 284-290.
    6. Schwaiger, Rene & Huber, Jürgen & Kirchler, Michael & Kleinlercher, Daniel & Weitzel, Utz, 2022. "Unequal opportunities, social groups, and redistribution: Evidence from Germany," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    7. Dong, Zhiqiang & Zhang, Yanren, 2022. "Tournaments as coordination devices: Theory and experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).

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    More about this item

    Keywords

    winner-take-all reward structures; fairness; income inequality;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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