Week 3: Superstar Effect - Ordinal Selection

Question 1

What would the distribution of talent look like?

Answer 1

A normal distribution because it’s the summation of many complex traits

Question 2

*What was Rosen’s ordinal selection model?

Answer 2

Believed that the histogram for success looks the way it does because people will choose what is the best

Question 3

*Why was Rosen’s ordinal selection model wrong?

Answer 3

His model implies that success is a function of quality and assumes that people can distinguish between small qualitative differences

Question 4

What was Rosen’s explanation for why we don’t get a step function?

Answer 4

There is heterogeneity of taste and diminishing marginal utility

Question 5

Heterogeneity of Taste

Answer 5

each person has different preferences (e.g. music tastes)

Question 6

Diminishing marginal utility

Answer 6

each incremental use is less than the previous use (e.g getting tired of an album the more you listen to it)

Question 7

Describe how dating apps are a way of measuring talent

Answer 7

The success model for women on dating apps is very similar to a superstar distribution

*mens attraction for women is driven by their physical attractiveness
*number of messages a women receives grows exponentially as a women is viewed as being more attractive

Question 8

How can inequality in the market be measured?

Answer 8

Gini coefficient

Question 9

Gini coefficient

Answer 9

a measure of inequality where zero means everyone has exactly the same and one means one person has everything and the rest have nothing

*media has a very high gini coefficient (e.g. radio airplay has a gini coefficient of 0.9)