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Economics of Talent: Dynamics and Multiplicity of Equilibria

In: Dynamic Perspectives on Managerial Decision Making

Author

Listed:
  • Yuri Yegorov

    (University of Vienna)

  • Franz Wirl

    (University of Vienna)

  • Dieter Grass

    (Vienna University of Technology)

  • Andrea Seidl

    (University of Vienna)

Abstract

The economics of art and science differs from other branches by the small role of material inputs and the large role of given talent and access to markets. E.g., an African violinist lacks the audience ( = market) to appreciate her talent unless it is so large that it transgresses regional constraints; conversely, a European violinist of equal talent may be happy to end up as a member of one of the regional orchestras. This paper draws attention to this second aspect and models dynamic interactions between investments into two stocks, productive capital and access (or bargaining power). It is shown that there exists multiple equilibria. The separation between pursuing an artistic career or quitting depends on both idiosyncracies, individual talent and individual market access (including or depending on market size), which explains the large international variation in the number of people choosing a career in arts as market access is affected by geographic, linguistic, and aesthetic dimensions.

Suggested Citation

  • Yuri Yegorov & Franz Wirl & Dieter Grass & Andrea Seidl, 2016. "Economics of Talent: Dynamics and Multiplicity of Equilibria," Dynamic Modeling and Econometrics in Economics and Finance, in: Herbert Dawid & Karl F. Doerner & Gustav Feichtinger & Peter M. Kort & Andrea Seidl (ed.), Dynamic Perspectives on Managerial Decision Making, pages 37-61, Springer.
    • Handle: RePEc:spr:dymchp:978-3-319-39120-5_3
    DOI: 10.1007/978-3-319-39120-5_3
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    Citations

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    Cited by:

    1. Feichtinger, Gustav & Grass, Dieter & Kort, Peter M. & Seidl, Andrea, 2021. "On the Matthew effect in research careers," Journal of Economic Dynamics and Control, Elsevier, vol. 123(C).
    2. Yegorov, Yury & Wirl, Franz & Grass, Dieter & Eigruber, Markus & Feichtinger, Gustav, 2022. "On the matthew effect on individual investments in skills in arts, sports and science," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 178-199.

    More about this item

    Keywords

    Art; Intertemporal investment; Market access; Multiple equilibria; Talent;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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