Excessive pay is not about the numbers. How power abuse erodes inequality acceptance

Abstract

We investigate how inequality acceptance depends on power abuse. Running a large- scale pre-registered two-stage experiment, we measure inequality acceptance through spectators redistribution choices. We randomize whether a worker can decide their initial earnings, potentially abusing their power for their own gain at the expense of their co-worker by allocating high earnings to themselves. Then, impartial spectators redistribute. We find that spectators give significantly lower earnings to workers de- ciding their own initial earnings, compared to workers with identical but externally decided initial earnings. Spectators redistribute substantially when confronted with power abuse, while they accept meritocratic initial earnings regardless of who pro- poses. While most spectators redistribute to achieve meritocratic shares, a minority of spectators switches to active punishment in the face of power abuse. Thus, allowing for power abuse dismantles a consensus to implement meritocratic (and unequal) pay.