DP6377 | Practice Makes Perfect: On Professional Standards

Publication Date

06/07/2007

JEL Code(s)

Keyword(s)

Programme Area(s)

Abstract

Professional standards vary across professions and also change over time. One profession which has remained perfectionist is classical music, where the amount of practising is striking compared with other professions. Practising is a matter of increasing the reliability of ones skills rather than relying on a tool or a strike of genius to get it right. Once perfection has been achieved the individual will aim for higher quality since the effort is more likely to be worthwhile. Because the returns from perfection are higher the harder it is, the perfectionist equilibrium only arises in situations where genius is rare and reliability is low. As tools improve, even though perfection has become easier to achieve, professional standards may nonetheless decline. This mechanism is captured in an oligopoly model, where the failure rate and the quality are endogenously determined. It is shown that whilst individuals might be better off not playing a perfectionist equilibrium when reliability is low, welfare is higher in the perfectionist equilibrium than an enthusiastic equilibrium. Furthermore, when reliability is high individuals will play an enthusiastic equilibrium even though welfare and profits would be higher if they were perfectionists.