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Fairness in Winner-Take-All Markets

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.

Authors: 
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
Publication Date: 
May, 2018
Publication Status: 
Document Number: 
2018-031
File Description: 
First version, May 20, 2018