Untalented but Successful
Olivier Gergaudy and Vincenzo Verardiz
July 23, 2009

Abstract

When studying the problem of the emergence of superstars, scholars face dif…culties in measuring talent, obtaining con…dential data on earnings, and …nding
econometric techniques that are robust to the presence of outliers (superstars).
In this paper we use a quasi-experimental dataset from the Pokemon trading card
game in which (i) there is no unidenti…able heterogeneity, (ii) rarity can be separated from talent and (iii) objective earnings are observable through transaction
prices. Using semi-parametric estimation techniques, we …nd that the seminal
theories of superstars developed by Rosen (1981) and Adler (1985) are complementary and not, as is often claimed, mutually exclusive. In short this paper
shows that fame is not the prerogative of the most talented individuals.
Keywords: Superstars, Semi-parametric Estimation, Hedonic Prices, Quasiexperimental Data
JEL Classi…cation: C4, D4, Z19
We would like to thank Françoise Benhamou, Natalie Chen, Andrew Clark, Catherine Dehon, Marjorie
Gassner, Victor Ginsburgh, Jean-Philippe Platteau and Günther Schulze for helpful suggestions as well
as seminar participants at the EEA-ESEM and ACEI 2006 meetings and all of our colleagues at CRED,ECARES, OMI and TEAM who helped us in the process of this work.
y
Université de Reims and Reims Management School. Address: 57 bis, rue Pierre Taittinger, 51096 Reims
Cedex, France. Tel.: + 33 (0) 326.08.22.35, Fax: + 33 (0) 326.91.38.69, E-mail: olivier.gergaud@univ-reims.fr.
z
CRED, Facultés Universitaires Notre Dame de la Paix de Namur; ECARES, CKE, Université Librede Bruxelles. E-mail: vverardi@fundp.ac.be. Vincenzo Verardi is Associated Researcher of the FNRS andgratefully acknowledges their …nancial support.

1

1

Introduction

Success stories (and superstardom) are commonly believed to be related to talent. Relying on
this idea, Rosen (1981) developed an elegant theoretical model showing how “small di¤erences
in talent become magni…ed in large earnings di¤erences, with greater magni…cation of theearnings-talent gradient increasing sharply near the top of the scale” (p.846). This vision
was refuted by Adler (1985) who suggests that superstars may emerge even among equallytalented individuals. He argues that superstars are those artists who happen to be known
by the group, not necessarily because of their talent, and bene…t from the network e¤ects
induced by the need of consumers to share a common culture (Adler, 2006).
A recurrent question in the economic literature is which of Rosen’s or Adler’s theory
better predicts the emergence of superstars or, in other words is superstardom related totalent at all? Empirical …ndings mostly point in Adler’s direction but cannot lead to a clear
rejection of Rosen’s hypothesis since talent itself is generally poorly measured (see Adler,
2006).
Theories of superstardom are inevitably di¢ culty to test and it is essential to rely on adataset created in a quasi-experimental setup where talent is explicitly measurable, quanti…ed
independently of rarity, cuteness or any other factor that could have an e¤ect on economic
success. Also it needs to be able to identify objectively the di¤erences between individuals
so that the confounding e¤ects can be identi…ed and measured e¢ ciently.
As far as we know, there is no empirical paper in the existing literature that addresses
these issues at the same time (see section 2 for more details on available tests of both theories).
2

In this paper, we answer this question by using some new data from the Pokemon Trading
Card Game (TCG), in a similar way as Mullin and Dunn (2002) for baseball player cards orLucking-Reiley (1999) for the Magic Trading Card Game1 .
Collectible card games are well suited to testing for the predictions of the two competingsuperstar theories since they have the intrinsic characteristics assumed in both models. Indeed, the potential audience is large since the game is played in almost all schoolyards aroundthe world and cards are not substitutable. Note however that, as in the case of sports, theconstant marginal cost of duplication will be of secondary importance here. The card supplierhas indeed no interest in duplicating top cards extensively. They would rather actually print
a limited number of strong cards to maintain some rivalry among consumers. As in the caseof congestion in the music industry, the large earnings from top cards will thus come from amore than proportional increase in prices rather than from the actual number of cards sold.
As far as the characteristics of the dataset are concerned, they are particularly usefulhere since talent is fully observable, totally objective and explicitly provided in the cards;
the supply of cards is exogenously controlled by a single …rm (Wizard of the Coast) thatprovides objective rarity indicators; the trading price of cards is available and represents anadequate measure of economic success; no role whatsoever is played by managers and, mostimportantly, Pokemons are particularly well suited to analyzing the emergence of idols, given
1

A TCG is a game played using specially designed sets of playing cards that combine collecting withstrategic gameplay purposes. Only a subset of the existing cards is used in the game and each card has a
speci…c e¤ect on the game. Some cards are more powerful than others. These are also generally more di¢ cult
to …nd on the market.

3their huge commercial success.
The Pokemon TCG can be considered as a quasi-experimental dataset in the sense that all
characteristics of individuals are objectively measured. Furthermore, since the experimental
design was not speci…cally engineered to answer the questions we raise, we believe that
consumers’behavior is spontaneous and not biased in favor or against a speci…c hypothesis.
As stated previously, Rosen’s (1981) main result is based on the possibility for the best
performer of reproducing massively (at almost zero cost) his/her performance. A second nondegenerate equilibrium (with several suppliers) exists when such cloning is not possible. In
this case the larger earnings of the best performers will come from the price charged by thebest performers rather than by the quantities sold. In our data setup, this is clearly thesecond scenario since it is impossible to reproduce performance (i.e. cards). We therefore
expect, if Rosen’s intuitions prove right, that the congestion due to the limited supply of top
cards, will induce a convex relation between card strength and their price with the slope of thegradient increasing sharply for the very best ones. On the other hand, if Adler’s predictions
are right, we expect to observe cards sold at much higher prices than their competitors for
all levels of talent.
Our empirical strategy is to estimate a hedonic price equation for this TCG, taking into
account the possible existence of superstars. This is done using a semiparametric regression
model where only very weak assumptions are made on the function linking earnings andtalent. The estimations show that superstars à la Rosen may coexist with superstars à laAdler. In the long run there is some evidence suggesting that both types of superstars might4

disappear even if the latter tends to disappear faster.
The paper is organized as follows: section 2 reviews brie‡y the economics of superstars,
section 3 presents the game and section 4 describes the data. Section 5 lays down theempirical strategy, and section 6 presents the results. Finally, section 7 concludes.

2

The Economics of Superstars

2.1

Rosen (1981) and Adler (1985)

A key issue in the economics of superstars literature is to learn which of Rosen (1981) and/or
Adler (1985) better predicts their emergence or, stated di¤erently, to what extent fame isrelated to talent (à la Rosen) or not (à la Adler). The question is of primary interest in our
modern societies as earnings di¤erences tend to grow rapidly and huge bonuses are often the
reward for questionable economic performances.
Rosen (1981) and Adler (1985) arrive at these con‡icting conclusions as they have widelydi¤erent visions of the demand side, even though they agree that superstardom hinges uponlarge economies of scale on the supply side.2
More precisely, Rosen (1981) believes that lower talent is an imperfect substitute forhigher talent and, assuming that talent is fully observable, concludes that the (slightly) moretalented individuals attract the market demand towards them. A central point of the Rosen’s
2

In the music industry, for instance, the economies of scale associated to the reproduction of CD’s areenormous.

5model is the possibility of reproducing the performance of artists at almost zero cost. In thissetup the most talented performer will be able to reproduce his/her performance extensively
and make it available to all. This will generate huge earnings. Note however that Rosen(1981) emphasizes that his model is not restrained to only those activities where some formof cloning is possible. Schulze (2003) provides a good illustration of this point using thenotion of club goods. More speci…cally, he considers a public performance (such as a concert)where unit costs decrease with rising audience size. He believes that there will be congestion
at some point since “a classical live concert is more enjoyable in a medium-sized concert hallthan in a football stadium”(p. 432). These congestion costs will put a limit on the optimal
size of audience and lead to non-degenerate market equilibria where more than one supplier
will exist. Nevertheless, higher quality artists will charge higher prices (for at least the sameaudience) and will consequently have larger earnings.
On the other hand, Adler (1985) places great emphasis on network e¤ects. Drawing
on Stigler and Becker’s (1977) well-known notion of consumption capital, he states that a
consumer’s appreciation of an artistic good depends both on his/her past consumption andhis/her interaction with other experienced consumers. Since more popular artists have higher
interaction potentials (search costs needed to …nd an interesting interlocutor are lower), he
concludes that networks can snowball an individual into becoming a superstar, even if s/heis not highly talented. For Adler, superstardom is driven by the initial advantage of being
identi…ed (and consumed) by some members of the group, and social links do the rest. In a
more recent paper, Adler (2006) even states that this is probably why artists use publicity

6such as appearances on talk shows and coverage in tabloids and magazines to enhance their
popularity.

2.2

Available Empirical Evidence

Available empirical evidence we have on the relationship between economic success and talent
are sparse and fuzzy essentially because of a lack of appropriate data to test these theories
adequately.
Lucifora and Simmons (2003) claim that Rosen’s (1981) and Adler’s (1985) theories canbe used to explain the emergence of superstars in sports. They argue that the necessary(and su¢ cient) conditions underpinning the original models are met since the potential audiences are large (thanks to the size of stadiums and the media coverage) and performers
are perceived by consumers as imperfectly substitutable. They highlight, however, that theconstant marginal cost of duplication underlying Rosen’s hypothesis is, in the case of sports,of secondary importance. Indeed, each sport event is unique and “live” performances aremuch more valuable than video replays.
Hamlen (1991, 1994), studying the music industry, …nd that talent, proxied by voice
quality as measured by musicologists, improves record sales with rewards for talent that are
far less than proportional to di¤erences in talent. This may be seen as evidence against
Rosen’s theory but, can voice quality be reasonably considered as a good proxy for talent?
Studying the same industry, Chung and Cox (1994) …nd that the superstardom phenomenon
is mainly the result of a probability mechanism which predicts that “artistic outputs will7

be concentrated among a few lucky individuals” (p.771), but do these few lucky individuals
have the same objective level of talent as the unsuccessful artists?
Proxies for talent are often only ex-post measures of career success and are therefore
endogenous in some emprirical studies. Lucifora and Simmons (2003) for example use, among
other indicators, the number of goals scored by a soccer player as a proxy for his/her talent.
But, if we accept the fact that a player is more productive if s/he plays in a good environment,
an average player may well end up playing for a top team, for example thanks to his/herskilled agent, and consequently become a heavy scorer. The endogeneity of the measure isevident. This example also points out that a measure of an artist’s talent should not bein‡uenced by the skills of his/her manager. Indeed, a well managed mediocre artist could
reach fame and success, while an excellent performer could remain unknown if his/her agent
is ine¢ cient. Finally, talent must be quanti…ed independently of rarity, which may complicate
the measurement substantially. For instance, are minor paintings from icon painters morevaluable because of their quality or because of their limited supply?
Another di¢ culty is that earnings are also imperfectly quanti…ed. As Rosen (1981) argues,
privacy and con…dentiality make data collecting (especially on earnings) very problematic.

3

The Game

In this section, we very brie‡y present the fundamentals of the extremely sophisticated rulesof the Pokemon Trading Card Game. More complete explanations are provided in Appendix
1 and, for further details, we refer to the complete rules available in reference sites dedicated8to pocket monsters such as pojo.com. Note, however, that full knowledge of the rules is notindispensable for the understanding the paper.
Basically, the game is played as follows: two players take turns playing cards from theirhands. At each turn, the player chooses one Active Pokemon to attack with it. This will
either cause some damage to the opponent’s Active “Defending Pokemon" or has some othere¤ect (such as making it fall asleep, confused, paralyzed, or poisoned) that will a¤ect his/herability for the following counter-attack. If the attack does enough damage to knock out thedefending pokemon, the winning player gets 1 Point. When a player has knocked out 6 ofthe opponent’s active Pokemons, s/he wins the game. Each pokemon card has a "level"of training indicating its strength in the game. The higher the card level, the higher thedamages the pokemon can induce and the higher its resistance to the opponents’attacks. It
is thus extremely easy for players to identify the most “talented”individuals.

4

The Data

In 2003, there were more than 400 pokemon cards (and around 200 in 2000) for 152 documented Pokemon species. Each creature has its own special …ghting abilities or characteristics. Creatures come in di¤erent shapes (mouse, rat, virtual, magnet, pig monkey, etc.) andsizes. Some Pokemon characters, such as Pikachu, are cute, while others, like Alakazam, areterrifying. In addition, each card has a speci…c rarity level which is exogenously determinedby Wizard of the Coast (the cards supplier).

9

Cards are commercialized in decks3 and individually. Note that the strongest cards are
rarely if not included in these decks. We collected data (including prices) on objective
characteristics of all 442 Pokemon cards available in the market as of January 2003. Our
source of information for prices is SCRYE, the guide to collectible games, a monthly magazine
reputed to be the most accurate source of game card prices among gamers. SCRYE provides
the median price charged by a large sample of retail outlets (around 40) across the UnitedStates and Canada. These prices re‡ect actual market transactions. SCRYE does not sellcards. In order to cover the market evolution of the most overpriced characters, we collected
price data for March 2000 (the booming period of Pokemons), July 2000, September 2000,
November 2000, January 2001, April 2002, October 2002 and January 2003.
Pokemons’characteristics can be divided into three groups: creature’s speci…cities, settings and rarity. These are printed directly on cards and thus readily available.

4.1

Creature’s Characteristics

Pokemon cards possess very di¤erent characteristics. The …rst and most important one is its
strength: each Pokemon is associated with a given number of damage points that it can cause
to the opponent (ranging from 0 to 120). The second and equally important characteristic is
its resistance to attacks, which is calculated in terms of hit points (ranging from 30 to 120). It
is important to highlight that the superstar theory is based on a one-dimensional measure oftalent, unlike a combination of "resistance" and "weakness" in the present case. However, as
3

Either on the Internet or through specialized games shops.

10stated previously, both features are generated by a single factor that is the “level”of trainingof the card. Indeed, the concept of the pokemon game is that monsters are born weak andtheir skills (both in attacking and defending) increase jointly thanks to training. Since thislevel is available, we can consider it as a one-dimensional measure of talent as assumed by
Rosen. To corroborate this point it is important to note that the level of pokemon cards
turned out to be highly (and positively) correlated4 with both “resistance” and “weakness”
suggesting that it is indeed a good composite index of both features.
Pokemons have other characteristics that are not related to absolute talent. For example,
each monster is characterized by a particular element (lightning, …ghting, …re, grass, psychic,water or colorless). There is no best element but creatures are sensitive to the element associated with the opponent. For example, a “…ghting” Pokemon is weak when opposed to a
“psychic”one and a “…re”Pokemon is weak when opposed to a “water”one. This in‡uences
the e¢ ciency of attacks and defense. The elements associated with pokemons are converted
into zero-one dummies, in order to control for the potential in‡uence of the type in the hedonic price estimation. Let us precise that there is no Condorcet winner in this setup for noneof these elements. Accordingly, we do not expect any of these characteristics to be valued
more than the others by consumers.
Similarly, the attacks of Pokemons can be strengthened (in the short run) by playing
trainer cards. Each Pokemon is associated with a trainer. This information is converted into
dummies, identifying all trainers. Finally, additional dummies are created to discriminate
4This auxiliary regression is available from: authors upon request.

11

between basic, evolution-one and evolution-two cards. Additionally, some cards can launchsophisticated attacks i.e. attacks producing speci…c damage which are expressed in terms ofother characteristics than hit points (such as, for example, reduction in the damages thatthe “Defendent Pokemon”can cause in the counter-attack). This information is summarizedusing dummy variables in the regression analysis.
Cuteness could also be argued to explain prices and not considering it in the hedonic
equation could bias the results. We do not agree with this for several reasons.
First, if we look at the problem from a player’s perspective, we conclude that the in‡uenceof cuteness is negligible since being good-looking does not a¤ect the odds of winning thegame. Similarly, if we look at it from a collector’s perspective, the value of cuteness should
become negligible once rarity is being taken into account. It is important to emphasizethat even if cuteness was signi…cantly prized, its introduction in the estimated model should
not a¤ect the generality of our results as the variables identifying the strength of cards andthe cuteness of monsters are orthogonal. However, we created seven dummies identifying
all the artists who designed the creatures, in order to capture part of the cuteness of thecharacter, but none turned out to be signi…cantly di¤erent from zero. Furthermore, looking
at the R-squared of the estimated hedonic price equation (see below), our model, based on
the objective characteristics, appears to explain almost perfectly the variations in the logof the price level (R2 = 99%). This means that the role of non-objective variables, such as
cuteness, eventually excluded from the speci…cation, is extremely marginal. Yet, cutenesscan be considered as the element that generated the Adler phenomenon.

12

4.2

The Setting

Each Pokemon card is member of a set (also called expansion)5 . Six expansions were registered in March 2000. They were published in the following order over time: 1. Basic (January1999), 2. Jungle (June 1999), 3. Fossil (October 1999), 4. Team Rocket (April 2000), 5.
Gym Heroes (August 2000) and 6. Gym Challenge (October 2000). Each expansion is characterized by a dummy variable which takes the value 1 if the Pokemon is a member of the
expansion, and 0 otherwise. The latter indicates the age of the character.

4.3

RarityCards are released set by set but the intensity with which each of them is supplied varies
from one card to another. For this reason, the supplier provides a rarity index indicating
the frequency with which each card is commercialized. This index is a categorical variable
having four homogeneous levels of rarity, with level one corresponding to the rarest.
Accordingly, this rarity indicator allows us to quantify the e¤ect of limited supply on prices
and makes it easier to separate collecting from playing purposes. Indeed, after controlling for
rarity, the only message conveyed by the card level is its strength in the game. Collectors areready to pay high prices for rare cards but do not put any premium on the card level itself.
Their objective is not so much to play the game as to possess all the cards. As a result, thecoe¢ cient associated to the card level can be viewed as the in‡uence that the talent of apokemon card has (in the game) on its price.
5

Two decks are released per expansion.

13

Finally, we control for the number of variants a card possesses. For example, there are
4 di¤erent Pikachu cards (Basic, Jungle, Gym Heroes and Gym Challenge), 2 Squirtle cards
and only one Chansey card. These variants explain why there are more cards (442) than
Pokemons (152). This variable ranges from 1 to 6 and allows to control for the fact that forthe purposes of the game, it may not be necessary to buy 4 versions of the same character
that are almost perfect substitutes.

5

The Estimations

Several informative features emerge from a descriptive analysis of the data. In Table 1, wesummarize the most interesting statistics.
As a …rst observation, both talent and price are highly related to rarity. This means thatnot controlling for scarcity in the hedonic price setup, would lead to large biases rendering an
accurate analysis of the superstar phenomenon impossible. As will be checked later on, rarity
captures around a third of the overall price variance. In this case, it is easy to control for it
since objective rarity measurements are available. This is a major advantage since accurate
indicators for rarity are generally not available in arts and sports.
As far as the distribution of talent is concerned, it may be argued that a concentration ofhighly talented individuals among the rarest ones is not consistent with true life situations,since it is as exceptional to …nd extremely talented individuals as to …nd extremely untalented
ones. Although we agree with this, we do not think it is relevant to artistic …elds (or sports)
since very untalented individuals generally remain out of the market. We thus believe that14

this distribution is in line with what should be intuitively expected.
[INSERT TABLE 1 HERE]
Considering the relation between rarity, talent and prices, it seems that Rosen’s hypothesis is con…rmed by the data. Indeed, the average price charged for one among the mostcommon cards is $0.26 and the average level (or talent) in that class is 14.11. In the rarity
class immediately above (Uncommon), the average price charged is $1 and the average levelis 25.45. Finally, in the two rarest groups (Rare and Holofoil Rare), the average levels arerespectively 31 and 35 and the corresponding prices are $6.10 and $14.63. For the two lastclasses, the improvement in the average level is rather small while the increase in prices issubstantial. Moreover, the Inter-quartile range of price increases with the degree of rarity
and talent. This may be evidence in favor of Rosen’s hypothesis suggesting that the relation between earnings and talent is convex “with greater magni…cation of the earnings-talent
gradient increasing sharply near the top of the scale”. However interesting these preliminary …ndings, we need a more precise analysis before any conclusion can be made on the
superstardom phenomenon.
This is done by estimating a hedonic price function. As indicated by Rosen (1974) andreasserted later by Nerlove (1995), hedonic prices are determined by both the distribution of
consumer tastes and producer costs. Therefore, with the exception of a few speci…c cases likethis one, where supply is exogenously determined, implicit prices are di¢ cult to interpretand do not exclusively re‡ect consumer preferences. Given the distinctive features of ourdata described above, we believe that this method is particularly well suited here.
15

Econometrically, we estimate a partially linear multiple regression where the dependent
variable is the log of the price and the explanatory variables are, on the one hand, thefour vectors of characteristics (i.e. creatures’characteristics Zi , card settings SETi , supply
conditions SU Pi and rarity RARi ) that enter the equation linearly and on the other hand thelevel (or talent) of the card for which no assumption is made on the functional form (exceptthat the …rst derivative of f is bounded). In other words, LEV ELi enters the equation
non-parametrically (see Appendix 2 for further details on the estimation method used).
The estimated relation is of the following type:Log (pi ) =

where

1;

2;

0+

3 and

1 Zi +

2 SETi +3 SU Pi +4 RARi + f (LEV ELi ) + "i

(1)

4 ; are (vectors of) coe¢ cients to be estimated and "i , is the errorterm.
If Rosen’s predictions are correct, we expect the relation between the price of cards andtheir level to be convex, with the gradient of the slope increasing sharply for the highest levelsof talent. Conversely, if Adler’s predictions are correct, we expect to observe highly rewarded
individuals at all levels of talent. Furthermore we expect these individuals to coincide with thecharacters who have been ’arbitrarily’chosen by the supplier and intensively promoted. Thisis particularly true for Pikachu and Squirtle, two poor and a¤ordable elements in the TCG
but heroes (as well as Charizard) in the successive Pokemon movies (1999 and 2000). We
expect these cards to be sold, all other things being equal, and in particular after controlling16

for di¤erences in talent, at higher prices than their closest competitors or substitute cards.
A high positive residual value for these cards should be seen as evidence of the existence of
positive network e¤ects à la Adler (1985).

6

The Results

Table 2 summarizes the results of the hedonic pricing estimation. In the …rst column we
present the results associated with a parametric model considering a quadratic relation bewteen the log of the price and the card level, while in the second column we present those
associated with a partial linear regression model. As expected, results are similar.

[INSERT TABLE 2 HERE]

For both models, the quality of the …t is extremely good as expected, since we control
for all objective characteristics. The most important variables in explaining the price are
rarity and talent. Rarity plays a particularly important role: being among the most common
individuals, drives down the price of a card by 98% (exp 41) compared to being among

the rarest ones (Rare Holofoil), all other things being equal. Belonging to the second (Uncommon) and third (Rare) most common groups of individuals reduces the price by 92% and
54% respectively (again compared to being among the rarest individuals). This result clearlyshows that rarity must be taken into account when studying the emergence of superstars.
When looking at the coe¢ cients of Talent and Talent squared in the parametric model,
it appears that the relation between prices and talent is convex. If we analyze the residuals,
17

we …nd that the most talented individual is associated with a large residual value suggestingthat Rosen’s hypothesis (of a sharp increase in the slope of the function for large levels oftalent) seems to be con…rmed. However other large residual values came out for inferior
levels of talent. This analysis of residuals is more interesting when considering a semiparametric model, where the relation between the log of the price level and the level can takeany form. We present this estimation in Figure 1. For clarity purposes we present a shaded
area illustrating the con…dence interval (CI). The upper bound of the interval is the estimated (nonparametric) …tted value of the dependent variable plus twice the median absolutedeviation (MAD) of the estimated (nonparametric) residuals (multiplied by the correction
factor of 1.4826 to ensure Gaussian consistency), while the lower bound is the …tted value
minus twice the corrected MAD. The MAD was used in the formula of the CI (instead of
the standard deviation of the residuals) to reduce the in‡uence of outliers (i.e. individuals
with large residuals such as Pikachu and Squirtle). Nevertheless, using the latter would onlyin‡ate the con…dence interval without a¤ecting the generality of the results.

[INSERT FIGURE 1 HERE]

Figure 1 clearly highlights that the relation between the log of prices and talent is increasing, convex and with a gradient increasing sharply for top individuals. It therefore goesin the same direction as Rosen. In contrast, we observe two large positive residuals among
the less talented individuals. This was clearly not predcited by Rosen but could be explainedby Adler’s theory.

18Adler (2006) states that “artists use publicity such as appearances on talk shows andcoverage in tabloids and magazines to signal their popularity”. In doing so, they strive toincrease their fame in hopes of winning over new consumers as these will prefer popular artists.
In the case of Pikachu this exposure comes from its predominant role in the movie “Pokemon:
The First Movie”. This initial advantage (Arthur, 1989) has contributed to building up its
popularity and prompted a large fraction of consumers to purchase this card (inducing ahigher demand and large overpricing). The same mechanism prevails with Squirtle. This is
more evidence backing up Adler’s assumption since both characters bene…ted from a similar
primary role in the movie.
An interesting feature to analyze is how these superstars have evolved over time. To doso, we run the same regression in di¤erent periods. Figure 2 shows the evolution of relative
pricing from March 2000 up to January 2003 for three superstars: Pikachu, Squirtle andCharizard. For Pikachu and Squirtle, the Alder superstars, we plot the level of overpricing andits evolution over time (i.e. the actual price over the price predicted by the semiparametricmodel). The reference vertical axis is the left-hand one. For Charizard, the Rosen superstar,
we plot the slope of the tangent near the best individual and the reference axis is the righthand one.
For Charizard we observe that the convex relation holds for most periods and only disappears during the last one. By contrast, when we look at the other two characters, thedegree of “network-generated” overpricing appears to decrease quickly and vanishes for all
the “non-Rosen” superstars in one year. This may mean that while high earnings related

19

to talent last longer, high earnings related to “the need of consumers to share a common
culture” disappear quickly. Even if we are aware of the fact that the market for collectible
cards might be di¤erent from that of art, this could be seen as evidence that superstars à laAdler might vanish rapidly if they do not manage to revive their popularity through somevery original merchandizing, while superstars à la Rosen could last longer.

[INSERT FIGURE 2 HERE]

7

Conclusion

Adler (2006) raised the following question: “Is stardom the reward for superior talent or does
stardom arise because consumers need to share a common culture?”. The previous empirical…ndings point in several directions and, as stated by this author, the study of the Economics
of Superstars is still rife with open questions. The major problem in testing the theoriesof the emergence of superstars resides in de…ning talent objectively. Proxies are frequently
used to tackle this issue, but they are generally imperfect (or even endogenous) measures.
Furthermore, the success of a performer mostly depends on the talent of his/her manager
and this aspect is often neglected. Finally, problems of con…dentiality also emerge whenmeasuring incomes.
We address the problem by using some new quasi-experimental data on the Pokemon
Trading Card Game. The dataset presents several advantages: …rst, talent is fully observable, totally objective and explicitly provided in the cards. Second, the supply of cards is20

exogenously controlled by a single …rm that provides objective rarity indicators. Third, themarket transaction price of cards is available in reference magazines over a long period oftime and represents an adequate measure of economic success. Finally, the talent of thecards does not depend on a manager’s. As far as we know, this is the …rst paper that deals
with all of these issues at the same time. To estimate the relation between economic successas proxied by prices and talent, we use a semiparametric regression model. The results ofthe estimations are unambiguous: the two main theories of superstars (that of Rosen (1981)
which emphasizes the role of talent, and that of Adler (1985), which puts more emphasis on
the need of consumers to share a common culture), are complementary and not substitutes
as is often claimed. Nevertheless, it seems that Adler’s superstars disappear more rapidly
than Rosen’s ones.
We show that the Adler phenomenon is the prerogative of individuals who have been
given a clear initial advantage in terms of public exposure (here by the game conceptor), i.e.
a high level of visibility in the successive movies associated with the TCG. This particular
type of fame, which is not talent but network based is shown to be more fragile as it vanishes
faster when the promoting activity winds down or ceases.

References[1] Adler, M. (1985), “Stardom and talent”, American Economic Review, 75: 208-211.
[2] Adler, M. (2006), “Stardom and talent”, in D. Throsby and V.A. Ginsburgh, eds.,

21

Handbook of the Economics of Art and Culture, Vol. 1, Chapter 25, Elsevier.
[3] Arthur, W.B. (1989), “Competing Technologies, Increasing Returns, and Lock-In by
Historical Events”, Economic Journal, 99(394): 116-131.
[4] Blass, A.A. (1992), “Does the baseball labor market contradict the human capital modelof investment?”, Review of Economics and Statistics, 7: 261-268.
[5] Chung, K. and R. Cox (1994), “A stochastic model of superstardom: an application of
the Yule distribution”, Review of Economics and Statistics, 76: 771-775.
[6] Hamlen, W. (1991), “Superstardom in popular music: empirical evidence”, Review of
Economics and Statistics, 73: 729-733.
[7] Hamlen, W. (1994), “Variety and superstardom in popular music”, Economic Inquiry,
32: 395-406.
[8] Lucifora C. and R. Simmons (2003), “Superstar e¤ect in sport: Evidence from Italian
Soccer”, Journal of Sports Economics, 4: 35-55.
[9] Lucking-Reiley, D. (1999), “Using Field Experiments to Test Equivalence Between Auction Formats: Magic on the Internet.”, American Economic Review, 89(5): 1063-1080.
[10] Mullin C. and Dunn L., (2002), “Using Baseball Card Prices to Measure Star Quality
and Monopsony”, Economic Inquiry, 40(4): 620-632[11] Nerlove, M. (1995), “Hedonic price functions and the measurement of preferences: thecase of Swedish wine consumers”, European Economic Review, 39: 1697-1716.
22[12] Rosen, S. (1974), “Hedonic prices and implicit markets: product di¤erentiation in purecompetition”, Journal of Political Economy, 82 (1): 34-55.
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[14] Schulze, G.G. (2003), “Superstars”, in: R. Towse, ed., Handbook of Cultural Economics,
Chapter 54, Edward Elgar (Cheltenham): 431-436.
[15] Stigler, G. and G. Becker G. (1977). “De gustibus non est disputandum”. American
Economic Review, 67: 76-90.
[16] Yatchew, A. (1997). “An elementary estimator of the partial linear model," Economics
Letters, Elsevier, 57(2): 135-143

23

8

Appendix

8.1

Appendix 1: The object of the game

The Pokemon TCG is played as follows: two opponents (de…ned as Pokemon trainers) startwith a deck of 60 cards each and …ght to determine who the best “monster” trainer is. A
player picks these 60 cards out of all the cards s/he has with the restriction that all charactersshould be di¤erent. Each player draws randomly a start-o¤ hand of 7 cards from his/her deck
(this is called the active hand). Among these s/he chooses a so-called “Active Pokemon”.
The objective of both players is to knock out the opponent’s active monster while keeping
theirs in play. A Pokemon is declared to have been knocked out as soon as the total damage
it has received from the opponent is equal to its number of hit points (or health points),
which is printed on the card. Once the active Pokemon has been knocked out, it must be
replaced by another one available in the active hand. If no Pokemon is available in the active
hand, the player must pick a card from the deck at each turn until s/he gets one. Players
take turns to pick a card from the deck, putting it in their active hand and launching an
attack if possible. In the game, there are three types of cards: Pokemon cards, energy cards
and trainer cards.
To attack, a player has to take from his/her active hand the energy cards needed tolaunch the speci…c assault and discard them at the end of his/her turn. Di¤erent attacks areassociated with di¤erent energy cards (Grass, Lightning, Colorless, Fire, Psychic, Darkness,
Water, Fighting and Metal). The type and the number of energy cards needed for an attack24

are de…ned on the active Pokemon card.
At each turn a player can increase the power of the assault by using a trainer card s/he hasin his/her active hand. This has a single period e¤ect: it implies that the card must be sent
to the discard pile once played. There are 9 trainers (Erika, Team Rocket, Blaine, Koga, Lt.
Surge, Brock, Giovanni, Sabrina and Misty) that have di¤erent empowering e¤ects. A player
can also strengthen his/her active Pokemon permanently by making it change using evolution
cards. For each Pokemon card, say x, there is a Pokemon card called "xand another called "xevolution

evolution

one"two". Evolution cards can only be played together withthe basic card, not alone.
Before the game starts, each player randomly draws six prize cards from his/her deck andsets them aside without revealing them. Each time a player knocks out one of the opponent’s
Pokemons, s/he randomly selects one of his/her own prizes (not the opponent’s) and put it
into his/her hand. The …rst player who manages …rst to take his/her 6 prizes wins the game.

8.2

Appendix 2: Partial linear regression estimator

Let us assume that the model is as follows:yi = zi + f (xi ) + "i for i = 1; :::; N(2)where yi is the value taken by the dependent variable for individual i, zi is the vectorof characteristics of individual i and xi is the value taken by the explanatory variable ofinterest for individual i. The latter variable is supposed to be drawn from a distribution with25

…nite support and measured without error. The relation between y and x is supposed to be
non-linear and of an unknown form. However, let us assume that the …rst derivative of f isbounded by a constant L. The errors "i are i.i.d with mean 0 and variance2".

Suppose that we rearrange the observations by sorting them in increasing order according
to variable x (i.e. x1
yix2

yi 1 = (zi:::xN ). By …rst di¤erencing, we get:zi 1 ) dif f + [f (xi )f (xi 1 )] + ("i"i 1 ) for i = 2; :::; N(3)

Increasing the number of observations (which broadly means …lling the …nite support interval of x with new values) will cause the di¤erence xi xi 1 to shrink at a rate of about 1=N .
Since the …rst derivative of f is assumed to be bounded, we have that jf (xi )L jxi

xi 1 j. The shrinkage of (xif (xi 1 )jxi 1 ) will therefore induce f (xi 1 ) to cancel out withf (xi ). This means that reordering and di¤erencing makes it possible to estimate thepara-meter consistently whatever the functional form of f as soon as @f =@x is bounded. In order
to visually assess the relation between y and x, it is now possible to run a nonparametricestimation of the …tted residuals ~"i = yizi ^dif f and x: Note that this simple estimator isine¢ cient (it has a Gaussian e¢ ciency of only 66.7%). To increase e¢ ciency, Yatchew (1997)
suggests using higher order di¤erences and considers a generalization of (3) which can be
written as:

m
X
j=0

dj yt j =mX
j=0

dj zi j!

dif f +mX

dj f (zi j ) +

j=0

m
X

dj "i j for i = m + 1; :::; N

(4)

j=0

where m is the order of di¤erencing. Two conditions are imposed on the di¤erencingcoe¢ cients d0 ; :::; dm . The …rst, which guarantees that the nonparametric e¤ects disappear,26

m
X
is thatdj = 0; the second, that guarantees that the residual in (4) has variance2" ; is that

j=0

m
X

d2j = 1. With m su¢ ciently large, the estimator approaches asymptotic e¢ ciency.

j=0

In this paper, the nonparametric estimator used is Nadaraya-Watson. Several alternative

estimators are available but our results turned out to be insensitive to the choice of thenonparametric estimator.
As far as inference is concerned, Yatchew (1998) shows that ^dif f has the approximate
sampling distribution:^dif f ~N
where;

1 1:5 2"N 2u

2u is the conditional variance of z given u.

(5)

It is then straightforward to computethe standard errors of the estimated parameters in the di¤erenced equation. As far as theinference associated with variable x is concerned, Yatchew (1998) developed a simple test
based on the comparison of the residuals scale of the di¤erenced equation (s2dif f ) with thatof the OLS regression where the function f is supposed to be constant (s2res ).
More precisely the test statistic is:V =N 1=2 (s2res s2dif f )~N (0; 1)s2dif fIf the null is rejected, it means that the e¤ect of the variable x on y is statistically di¤erent
from 0.
Note that Yatchew (1998) developed some more e¢ cient estimators by considering higher

27

order di¤erencing. However, since the results are insensitive to this variation in our setup,
we will not concentrate on these here.

28

TABLES
Table 1: Descriptive Statistics
RarityLevel Hit Points Damage
Rare - Holofoil 35.54
75.54
47.28
Rare
31.36
70
41.05
Uncommon
25.46
61.71
37.64
Common
14.11
45.79
21.32

Prices in $US (March-00)
Actual IQR4
IQR10
14.63
3
6
6.1
0
1.5
1
0
0
0.26
0
0

Table 2: PLR results for the Hedonic Price Equation - Parametric part
Variables
Log of the price level
Number of variants

0:005

Rarity:Rare

0:777***(0:012)(0:028)Uncommon

2:600(0:030)Common

3:974(0:045)

Pokemon type:
Elec

0:005
(0:0428)

Fire

0:042
(0:041)

Grass

0:018
(0:028)Psi

0:015(0:043)

Water

0:027

No weakness

0:005

No resistance

0:001(0:032)(0:023)(0:055)

Deck:
Jungle0:039(0:025)

Fossil0:015(0:028)Observations
R2

186
0.987

Standard errors in parentheses robust to heteroskedasticity ; *** p<0.01, ** p<0.05, * p<0.1

29

2

FIGURESLog of price1

1.5

Charizard

Squirtle

Pikachu
Blastoise

0.5

Alakazam

020

40
Talent60

Figure 1: Price-Talent Relationship

30

80

15

100

Pikachu

510Earnings-Talent GradientCharizard

0-50

Overpricing and Underpricing (%)
050

Squirtle

07-00

11-00

10-01

04-02

PeriodFigure 2: Superstar Phenomenon Over Time

31

01-03