(Not) Everyone Can Be a Winner - The Role of Payoff Interdependence for Redistribution

Sebastian Schaube () and Louis Strang ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: How does payoff interdependence affect preferences for redistribution? We experimentally implement a zero-sum setting and one in which everyone can be simultaneously successful. Across these, we compare redistribution given an identical level of inequality. First, two subjects’ performances in a real-effort task translate into chances of winning a prize. Across treatments, we vary the interdependence of payoffs: either there is only a single prize or both subjects can potentially win a prize at the same time. Afterwards, a spectator can redistribute the prize money. If payoffs are not directly interdependent, the average amount redistributed decreases by 14-22%. In additional treatments, solely performance determines the prize allocation. Nevertheless, the impact of payoff interdependence remains unchanged. Comparing the settings with and without randomness, we find that its mere presence increases redistribution, even though there is no uncertainty about the (relative) performance of the two subjects.

Keywords: Redistribution; Social preferences; Fairness; Lab experiment (search for similar items in EconPapers)
JEL-codes: C91 D31 D63 H23 (search for similar items in EconPapers)
Pages: 34
Date: 2019-06
New Economics Papers: this item is included in nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2019_097

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