The fairness of inequality due to risk and effort choices

Maj-Britt Sterba ()
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Maj-Britt Sterba: Max Planck Institute for Research on Collective Goods, Bonn

No 2022_05, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: Three determining factors for economic inequality are self-chosen effort, self-chosen risk, and external circumstances. The fairness people assign to inequalities due to effort and external circumstances is widely studied. Insights on the fairness of inequalities due to self-chosen effort and self-chosen risk, however, are lacking. I study a novel experimental setting where inequality is due to a choice over effort-provision and a choice over risk-taking. While the resulting inequality is mostly seen as fair, around 10% of third-party redistribution decisions are in line with a fairness norm that only considers the choice over effort.

Keywords: Inequality; Fairness; Risk-taking (search for similar items in EconPapers)
JEL-codes: C91 D63 D91 (search for similar items in EconPapers)
Date: 2022-06-07
New Economics Papers: this item is included in nep-cbe and nep-exp
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