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Fairness in winner-take-all markets

Author

Listed:
  • Björn Bartling
  • Alexander W. Cappelen
  • Mathias Ekström
  • Erik Ø. Sørensen
  • Bertil Tungodden

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

  • Björn Bartling & Alexander W. Cappelen & Mathias Ekström & Erik Ø. Sørensen & Bertil Tungodden, 2018. "Fairness in winner-take-all markets," ECON - Working Papers 287, Department of Economics - University of Zurich.
  • Handle: RePEc:zur:econwp:287
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    File URL: http://www.econ.uzh.ch/static/wp/econwp287.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.

    More about this item

    Keywords

    Winner-take-all reward structures; fairness; income inequality;

    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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