One explanation for the comparatively lower quality of movie sequels is selection bias, known in personnel economics as the Peter principle (Lazear, 2004). Only abnormally successful movies are selected for a sequel. Another explanation is a deterministic depreciation in quality due to the...

We develop a basic framework to understand the organization of highly creative activities. Management faces a fundamental tradeoff in organizing such activities. On the one hand, since creativity cannot be achieved by command and control or by monetary incentives, internal/contractual production...