Beauty and Preferences Formation Exemplified in the Sports Market

Hannah Josepha Rachel Altman, Morris Altman (), Benno Torgler and Stephen Whyte

CREMA Working Paper Series from Center for Research in Economics, Management and the Arts (CREMA)

Abstract: Beauty has been used as a fast and frugal heuristic, and therefore an important determinant of choice, as highlighted in research by Hamermesh. In a world of asymmetric information, beauty represents a proxy for objective characteristics or an object of desire, according to an individual’s preferences. A correlate of beauty, sexiness, has been used in sports to choose trainers or even to select the athletes expected to perform best, with people paying a premium for this beauty or sexiness. We argue that beauty can be a good or bad heuristic depending on the objective relationship between beauty and what it proxies. When it is a bad heuristic, it generates sub‐optimal outcomes for sports organizations. We discuss the conditions under which the beauty or sexiness heuristic generates sub‐optimal outcomes, why rational agents choose such a heuristic, and the conditions under which bad heuristics are sustainable. We also discuss this heuristic and the beauty premium in the context of Becker’s economic theory of discrimination, wherein rational decision‐makers trade‐off material considerations for the utility gained by contracting beautiful and sexy individuals. The latter has implications for the economic sustainability of an organization.

Date: 2021-03
New Economics Papers: this item is included in nep-cul, nep-spo and nep-upt
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