Knowledge, power, and self-interest

• Published in: Journal of public economics Vol. 150; pp. 39 - 52
• Main Authors: Kittel, Bernhard, Kanitsar, Georg, Traub, Stefan
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.06.2017
• Subjects: Experiment; Inequality; Network; Power; Redistribution; Self-interest; D63; Redistribution; Experiment; Network; Self-interest; C92; D72; Power; Inequality
• ISSN: 0047-2727; 1879-2316
• DOI: 10.1016/j.jpubeco.2017.04.004

The paperreports the results of a laboratory experiment assessing the impact of social position (endowment) and power (structurally advantaged or disadvantaged network positions) on redistributive decisions, which involve a classical efficiency-equality trade-off. The experiment involves three decision conditions: veil of ignorance, informed dictator, and majority vote. We use a three-person social-preference model in order to derive hypotheses on the effect of knowledge and power on tax choices. Our results confirm that disclosing the social position raises the measured self-interest (Knowledge Effect) and that mandating a majority vote results in concessions, the size of which depends on the player's structural position in the network (Power Effect). •Experimental study of joint effect of individual characteristics and social conditions on preferences for redistribution.•Elicitation of preferred tax rates under three conditions: veil of ignorance, informed condition and majority vote.•Disclosing own position increases the role of self-interest in redistribution (Knowledge Effect).•Mandating a majority vote results in tax concessions, the size of which depends on a player's structural power (Power Effect).