Fairness in Winner-Take-All Markets.

33 Pages Posted: 8 May 2018

See all articles by Björn Bartling

Björn Bartling

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Alexander W. Cappelen

Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Mathias Ekström

Norwegian School of Economics (NHH) - Department of Economics; Research Institute of Industrial Economics (IFN)

Erik Sorensen

Norwegian School of Economics (NHH) - Department of Economics

Bertil Tungodden

Norwegian School of Economics (NHH) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 30, 2018

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.

Keywords: Winner-take-all reward structures, fairness, income inequality

JEL Classification: C91, D63

Suggested Citation

Bartling, Björn and Cappelen, Alexander W. and Ekström, Mathias and Sorensen, Erik and Tungodden, Bertil, Fairness in Winner-Take-All Markets. (April 30, 2018). NHH Dept. of Economics Discussion Paper No. 08/2018, Available at SSRN: https://ssrn.com/abstract=3175189 or http://dx.doi.org/10.2139/ssrn.3175189

Björn Bartling

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Alexander W. Cappelen

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Mathias Ekström

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 55959817 (Phone)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Erik Sorensen

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
Bergen, NO-5045
Norway

Bertil Tungodden (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

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