Abstract

Competition is a cornerstone of economic life. Some environments are, however, more competitive than others and individuals are often confronted with the decision whether to self-select into a competitive environment. An important example is occupational choice: a self-employed lawyer is in constant competition for clients, whereas a lawyer working as a civil servant in a public authority is not. Likewise, some people vigorously compete for promotion to better paid jobs associated with a high prestige while others don’t. Understanding who self-selects into competitive environments and who shies away from them is thus important. In this paper, we test the hypothesis that individuals with a preference for egalitarian outcomes are more reluctant to self-select into competitive environments. Our hypothesis is based on (i) the observation that payoff inequalities among winners and losers arise as a natural by-product of competition; and (ii) the empirical literature showing that a nonnegligible share of children and adults is willing to incur costs to reduce earnings inequalities (see, e.g., Christopher Dawes et al. 2007; Ernst Fehr, Helen Bernhard, and Bettina Rockenbach 2008). We analyze data from several economic experiments implemented in a household survey study with mothers of preschool children. We

Citations