When are high earnings considered a legitimate target for redistribution, and when not? We design a real-effort laboratory experiment in which we manipulate the assignment of payrates (societal “reward rules”) that translate performance on a real-effort counting task into pre-tax earnings. We then ask subjects to vote on a flat tax rate in groups of three. We distinguish three treatment conditions: the same payrate for all group members (“equal” reward rule), differential (low, medium, and high) but random payrates (“luck” rule), and differential payrates based on subjects’ performance on a quiz with voluntary preparation opportunity (“merit” rule). Self-interest is the dominant tax voting motivation. Tax levels are lower under “merit” rule than under “luck” rule, and merit reasoning overrides political ideology. But information is needed to activate merit reasoning. Both these latter effects are present only when voters have “full merit knowledge” that signals precisely how others obtained their incomes.

Income redistribution with an efficiency loss is expected to have a twofold negative effect on support for redistribution, as it lowers egoistic support for redistribution and activates efficiency preferences. This study tests whether such a negative relationship exists, increases with the size of efficiency loss and interacts with group communication and the income position. We present a laboratory experiment in which subjects receive a randomly allocated income and must coordinate on a majority tax rate using a deliberative communication tool. The rate of money lost as a part of the redistribution process is manipulated as a treatment variable (0%, 5%, 20%, or 60%). Experimental evidence shows that efficiency loss exerts a robust negative effect on support for redistribution. The effect shows a tipping point pattern, is stronger at the lower end of the income distribution and is not fully explained by egoistic preferences. Inefficiency matters mostly for the chosen tax rate after group communication. At an efficiency loss of 60%, however, group communication does not affect support for redistribution, which implies that inefficiencies tend to play a minor role in the context of redistribution as long as they are within a moderate range. JEL Classification: C91, C92, D63, D72

What determines citizens’ preferences over alternative decision-making procedures – the personal gain associated with a procedure, or the intrinsic value assigned to it? To answer this question, we present results of a laboratory experiment in which participants select a procedure to decide on the provision of a public good. In the first stage, they choose between majority voting and delegation to a welfare-maximizing algorithm. In the second stage, subjects either vote on the public good provision, or the decision is taken by the algorithm. We define three experimental conditions in which participants receive information about whether a majority in the group faces a positive or negative pay-off from the public good provision, about whether there is a positive group benefit from its provision, or neither kind of information. Findings confirm the importance of instrumental motives in procedural choices. At the same time, however, a significant share of participants chose a procedure that does not maximize their individual benefit. While majority voting seems to be preferred for intrinsic values of fairness and equality, support for delegation to the welfare-maximizing algorithm increases if the group benefit from a public good is known – even in participants who are net payers for its provision.

Getting a grip on issues of administrative delegation is key to the performance of public organizations. The oversight game models delegation as a conflict of interest between an inspector and an inspectee to act in the interests of the former. This study tests alternative solutions to overcome ‘shirking’ in the oversight game. Specifically, we test the effect of external incentives, as implied by the game-theoretical solution, against the role of intrinsic factors, namely, public service motivation and job-related risk aversion. Evidence from a laboratory ( N = 208) and survey experiment ( N = 794) show that both the game-theoretical approach, which inspired new public management, and public service motivation, as its antithesis, fail to explain subjects’ behaviour. Instead, job-related risk aversion makes oversight more and ‘shirking’ less likely. This finding hints towards a more differentiated view of public employees’ risk attitudes to improve administrative delegation. Points for practitioners The promise of new public management that oversight issues in administrative delegation disappear with setting appropriate extrinsic incentives is too simplistic. Public service motivation, on the other hand, which started as an antithesis of the self-interested bureaucrat, also fails to solve the issue of ‘shirking’ in administrative delegation. Instead, job-related risk aversion appears to improve administrative delegation, which presents a remarkable counterpoint to the popular opinion in public management that risk aversion is problematic for public organizations’ performance. Rather than avoid selecting risk-averse public employees generally, more attention might be paid to the domains of administrative decision-making in which such traits can be beneficial.

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