A Bayesian approach of the consequence of failure on inequality acceptance: Experimental evidence

Abstract In this paper, we design a two‐stage experiment and tractable model. The first stage is tournament, the second involves hierarchical relationship where loser of tournament must declare what they think an acceptable earnings distribution to have incentive work for winner. We use Becker–Degroot–Marschak (BDM) procedure elicit distribution. show that failure in could decrease willingness accept wage inequality behavior relies on Bayesian updating. identify “fresh start” effect: When asset required win not same as uses produce after failure, acceptance higher.