Working Paper No. 1214

Fairness in Winner-Take-All Markets

Published: May 7, 2018Pages: 32Keywords: Winner-take-all reward structures; Fairness; Income inequalityJEL-codes: C91; D63

Fairness in Winner-Take-All Markets Björn Bartling, Alexander W. Cappelen, Mathias Ekström, Erik Ø. Sørensen and Bertil Tungodden


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.

Mathias Ekström

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mathias.ekstrom@ifn.se

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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