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Untalented but successful

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Abstract

When studying the problem of the emergence of superstars, scholars face great difficulties in measuring talent, obtaining confidential data on earnings, and finding econometric techniques that lead to results that are robust to the presence of outliers (superstars). In this paper we use an original dataset from the Pokemon trading card game in which (i) there is no unidentifiable heterogeneity and (ii) all characteristics of individuals are public domain. To prevent the results to be distorted by the presence of outliers, we estimate the " fair " price of each individual, using the robust " Least Trimmed of Squares " regression technique in a hedonic prices framework, and check the effective price at which they are sold. This allows to identify superstars, i.e. individuals that are sold at a price which represents several times their intrinsic value. We find that the two main theories of superstars developed by Rosen (1981), who awards a central importance to talent, and by Adler (1985), who awards more importance to the need of consumers to share a common culture are complementary and not mutually exclusive as is often claimed.

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  • Olivier Gergaud & Vincenzo Verardi, 2006. "Untalented but successful," Cahiers de la Maison des Sciences Economiques bla06017, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:mse:wpsorb:bla06017
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    File URL: ftp://mse.univ-paris1.fr/pub/mse/cahiers2006/Bla06017.pdf
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    References listed on IDEAS

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    1. Claudio Lucifora & Rob Simmons, 2003. "Superstar Effects in Sport," Journal of Sports Economics, , vol. 4(1), pages 35-55, February.
    2. Victor Ginsburgh & David Throsby, 2006. "Handbook of the Eonomics of Art and Culture," ULB Institutional Repository 2013/152412, ULB -- Universite Libre de Bruxelles.
    3. Hamlen, William A, Jr, 1991. "Superstardom in Popular Music: Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 729-733, November.
    4. Adler, Moshe, 1985. "Stardom and Talent," American Economic Review, American Economic Association, vol. 75(1), pages 208-212, March.
    5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    6. Hamlen, William A, Jr, 1994. "Variety and Superstardom in Popular Music," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 395-406, July.
    7. Blass, Asher A, 1992. "Does the Baseball Labor Market Contradict the Human Capital Model of Investment?," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 261-268, May.
    8. Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December.
    9. Chung, Kee H & Cox, Raymond A K, 1994. "A Stochastic Model of Superstardom: An Application of the Yule Distribution," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 771-775, November.
    10. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
    11. David Lucking-Reiley, 1999. "Using Field Experiments to Test Equivalence between Auction Formats: Magic on the Internet," American Economic Review, American Economic Association, vol. 89(5), pages 1063-1080, December.
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    Keywords

    Superstars; robust estimation; hedonic prices; leisure games.;

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Z19 - Other Special Topics - - Cultural Economics - - - Other

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