Economics of Talent: Dynamics and Multiplicity of Equilibria

Yuri Yegorov, Franz Wirl, Dieter Grass and Andrea Seidl
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Dieter Grass: Vienna University of Technology
Andrea Seidl: University of Vienna

A chapter in Dynamic Perspectives on Managerial Decision Making, 2016, pp 37-61 from Springer

Abstract: 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.

Keywords: Art; Intertemporal investment; Market access; Multiple equilibria; Talent (search for similar items in EconPapers)
JEL-codes: D90 L11 L82 Z11 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/978-3-319-39120-5_3

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