Performance, Luck and Equality: An Experimental Analysis of Subjects’ Preferences for Different Allocation Criteria

Abstract

AbstractWe perform an experimental analysis to investigate participants’ choices of allocative criteria under different conditions. We document that performance-based criteria guaranteeing a minimal egalitarian base are widely preferred by both neutral spectators and stakeholders without information on relative payoffs, although popularity among stakeholders is mostly due to self-interest considerations and optimism concerning their expected performance. Information regarding the distribution of payoffs under different criteria dramatically reduces such choice because the self-interest motive directly emerges, and most players opt to revise their decision in favor of the criterion maximizing their own payoff.