Strategic Choices for Redistribution and the Veil of Ignorance : Theory and Experimental Evidence

We provide theoretical conjectures about and experimental evidence on the emergence of redistributive societies. Individuals first vote on a distribution rule with their feet and then invest and redistribute total income according to the chosen rule. We vary the individuals’ information about their productivity at the time they choose a distribution rule and find that there is more redistribution behind a veil of ignorance than in the glare of full information. However, the scope of redistribution is less sensitive to the degree of uncertainty than predicted by a model of selfish and rational expected utility maximizers. For all degrees of uncertainty, we find a coexistence of libertarianism and redistribution as well as imperfect segregation, so that heterogeneous redistribution communities turn out to be sustainable