Brown Bag Seminar: Fairness in long-term contracts

Many distributive decisions occur in dynamic settings, where payments are applied repeatedly, and individuals differ in how long they remain eligible. Examples include deferred compensation, pension accrual, bonus schemes, and insurance contracts. A distinctive feature of such settings is that two individuals can be treated identically in each period yet accumulate unequal total earnings because of different participation horizons. This generates a normative tension absent in one-shot redistribution problems. In this project, we ask: which principle constitutes a fair payment rule in such dynamic contexts? Are standard fairness ideals based on static environments predictive of intertemporal allocation decisions? We develop an incentivised laboratory experiment measuring distributive choices when inequality arises along two dimensions: contribution and participation time. The design isolates whether individuals treat each dimension as normatively relevant and quantifies the corresponding fairness views.