The Economics of Superstars

There are two common elements of economic superstars. First, there is a close connection between personal reward and size of the market. Second, there is a tendency for market size and reward to be skewed to the most talented people in the field.

Read the paper.

See also:

  • Tournament Like Fields With Asymetric and Convex Payouts Favor High-Variance Strategies

    Fields that exhibit tournaments with asymmetric and convex payouts favor high-variance strategies (variance from the benchmark mean).

  • Don’t Normalize Mediocrity

    When coming up with goals for your business, it’s a disservice to adjust it down to make everyone—employees, investors, yourself—feel better. There are important goals like staying alive, raising your next round, or seizing the opportunity that are the cold reality of markets that you can only temporarily avoid. While showing progress is important, it’s easy to normalize mediocrity if you’re not careful which is much worse for the company than having to tell your investors you are not meeting the goal.