The Klein-Leffler (1981) model of product quality does not explain why high-quality firms would dissipate the rents they earn from quality- assuring price premia, and it relies on consumers knowing the cost functions of firms. In the present paper, consumers do not know any firm's cost of...

We consider the possibility a draft increases the likelihood individuals will invest in human capital in the military. This possibility exists because those drafted have less time to reap the return from human capital investment since, with a volunteer military, one need not enlist. A draft is...

This paper explores the dilemma of choosing talent using NBA data from 1987-2003. We find that there is much uncertainty in selecting talent. If superstars are found they are usually identified early, however, more false positive exist than correct decisions with high draft picks. Our results...

The usual explanations for superstar effects---when a firm’s revenue is positive and convex in quality, and a few firms earn a large share of market revenue---are imperfect substitution between sellers, low marginal cost of output, and marginal cost declining as quality increases. Herein, a...

In an influential article, “Unraveling in Matching Markets,” Li and Rosen (1998) note the first seven picks, and 17 among 29 first round selections of the 1997 NBA draft, were not college seniors. In 2004, the first pick in the NBA draft was a high school senior, and 25 of the first 29 picks...

Adam Smith’s proposal for paying professors was intended to induce increased faculty knowledge. If students have imperfect information about what they learn, and universities can only imperfectly measure the input of faculty time in student learning, publications may be used to measure faculty...