What is fair? Experimental evidence on the trade-off between equality and reward

Meritocracy implies paying people according to their performance. It thereby comprises two principles: (i) paying individuals with higher performance more (reward) and (ii) paying people with equal performance equally (equality). While the literature has mainly focused on the reward dimension, we lack evidence on the importance that people attach to equality. This is surprising given that the theoretical social justice literature has pointed out that in many circumstances it is impossible to fulfill both principles at the same time. We empirically investigate individuals’ fairness preferences regarding both reward and equality. In particular, we describe the importance of equality if individuals cannot simultaneously pursue both principles. Furthermore, we explore individuals’ willingness to pay for fulfilling the equality and reward principles by experimentally varying the cost of doing so. To this end, we implement a pre-registered experiment in a survey among a representative US sample.