Equality, equity and incentives: An experiment

We study a fundamental conflict in economic decision-making, the trade-off between equality, equity and incentives, in a new experimental game that nests a voluntary contributions mechanism in a broader spectrum of incentive schemes. In a 2×2 design, we let subjects either vote on or exogenously encounter incentive settings while assigned unequal endowments are either task-determined or random. We find that earned endowments lead to less support for redistribution and less cooperation. Subjects' voting is influenced by egalitarian and equity concerns, in addition to self-interest. Cooperation rates respond rather continuously to incentives.

► We study the trade-off between equality, equity and incentives. ► We develop a new experimental framework nesting a voluntary contribution mechanism. ► Subjects differ in endowments and can vote on redistribution. ► We find subjects' voting to be influenced by egalitarian and equity concerns. ► Cooperation rates respond rather continuously to incentives.