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The creative instability hypothesis

Author

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  • Peter Earl

    ()

  • Jason Potts

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Abstract

This paper provides an analysis of why many ‘stars’ tend to fade away rather than enjoying ongoing branding advantages from their reputations. We propose a theory of market overshooting in creative industries that is based on Schumpeterian competition between producers to maintain the interest of boundedly rational fans. As creative producers compete by offering further artistic novelty, this escalation of product complexity eventually leads to overshooting. We propose this as a theory of endogenous cycles in the creative industries. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Peter Earl & Jason Potts, 2013. "The creative instability hypothesis," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(2), pages 153-173, May.
  • Handle: RePEc:kap:jculte:v:37:y:2013:i:2:p:153-173
    DOI: 10.1007/s10824-012-9174-6
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    References listed on IDEAS

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    1. Lanham, Richard A., 2006. "The Economics of Attention," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226468822, April.
    2. Adler, Moshe, 1985. "Stardom and Talent," American Economic Review, American Economic Association, vol. 75(1), pages 208-212, March.
    3. Earl, Peter E., 2001. "Simon's travel theorem and the demand for live music," Journal of Economic Psychology, Elsevier, vol. 22(3), pages 335-358, June.
    4. Jason Potts & Stuart Cunningham & John Hartley & Paul Ormerod, 2008. "Social network markets: a new definition of the creative industries," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(3), pages 167-185, September.
    5. Magee, Gary B., 2005. "Rethinking invention: cognition and the economics of technological creativity," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 29-48, May.
    6. Daniel John Zizzo, 2003. "Empirical evidence on interdependent preferences: nature or nurture?," Cambridge Journal of Economics, Oxford University Press, vol. 27(6), pages 867-880, November.
    7. A. Norman & A. Ahmed & J. Chou & A. Dalal & K. Fortson & M. Jindal & C. Kurz & H. Lee & K. Payne & R. Rando & K. Sheppard & E. Sublett & J. Sussman & I. White, 2004. "On the Computational Complexity of Consumer Decision Rules," Computational Economics, Springer;Society for Computational Economics, vol. 23(2), pages 173-192, March.
    8. Peter E. Earl & Jason Potts, 2004. "The market for preferences," Cambridge Journal of Economics, Oxford University Press, vol. 28(4), pages 619-633, July.
    9. Paulo Brito & Carlos Barros, 2005. "Learning-by-Consuming and the Dynamics of the Demand and Prices of Cultural Goods," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(2), pages 83-106, May.
    10. Scitovsky, Tibor, 1981. "The Desire for Excitement in Modern Society," Kyklos, Wiley Blackwell, vol. 34(1), pages 3-13.
    11. Throsby, David, 1994. "The Production and Consumption of the Arts: A View of Cultural Economics," Journal of Economic Literature, American Economic Association, vol. 32(1), pages 1-29, March.
    12. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    13. Donata Favaro & Carlofilippo Frateschi, 2007. "A discrete choice model of consumption of cultural goods: the case of music," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(3), pages 205-234, September.
    14. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
    15. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    16. Earl, Peter E. & Peng, Ti-Ching & Potts, Jason, 2007. "Decision-rule cascades and the dynamics of speculative bubbles," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 351-364, June.
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    Cited by:

    1. repec:zbw:esthes:157994 is not listed on IDEAS
    2. Berg, Nathan, 2014. "Success from satisficing and imitation: Entrepreneurs' location choice and implications of heuristics for local economic development," Journal of Business Research, Elsevier, vol. 67(8), pages 1700-1709.
    3. Bianchi, Marina, 2014. "The magic of storytelling: How curiosity and aesthetic preferences work," Economics Discussion Papers 2014-23, Kiel Institute for the World Economy (IfW).
    4. Bianchi, Marina, 2014. "The magic of storytelling: How curiosity and aesthetic preferences work," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-30.

    More about this item

    Keywords

    Economics of creativity; Creative industries; Schumpeterian competition; Overshooting; D11; D21; Z11;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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