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Journal of Applied Mathematics
Volume 2015, Article ID 303912, 15 pages
http://dx.doi.org/10.1155/2015/303912
Research Article

Competition, Income Distribution, and the Middle Class: An Experimental Study

1Department of Economic Sociology and FOR 2104, University of Vienna, 1090 Vienna, Austria
2Department of Economics and FOR 2104, Helmut-Schmidt-University, 22043 Hamburg, Germany

Received 5 December 2014; Revised 28 January 2015; Accepted 17 February 2015

Academic Editor: Klarita Gërxhani

Copyright © 2015 Bernhard Kittel et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

We study the effect of competition on income distribution by means of a two-stage experiment. Heterogeneous endowments are earned in a contest, followed by a surplus-sharing task. The experimental test confirms our initial hypothesis that the existence of a middle class is as effective as institutional hurdles in limiting the power of the less able in order to protect the more able players from being expropriated. Furthermore, majoritarian voting with a middle class involves fewer bargaining impasses than granting veto rights to the more able players and, therefore, is more efficient.