Elite Education

Review of the Literature
In this section, we discuss the concepts that are related to the research question. First, we outline the aspect of elite education serving as a quality signal. Then, we examine the theoretical framework of the connection between elite education and future earnings. Lastly, we elaborate on the concept of reputation.
Elite education as a quality signal
Spence (1973) was the first who conceptualized the signaling theory describing the effects that various signals have on their recipients, in the business context. He applied the job applicants’ educational background as a signal that conveys a perceived quality to the hiring managers. He came to the conclusion that applicants’ esteemed educational background has a competitive

This argument is based on the assumption that information asymmetries about the products exist between producers and consumers. By giving information about the “true” attributes of their products, companies send signals about the quality of their products (Rindova et al., 2005). These signals serve to lower the information asymmetries. In addition, based on their previous experiences about the quality of products, consumers make choices about whether or not to purchase the product again. If they are satisfied with the product, they will buy it again. Consumers are willing to pay a premium for a product that satisfies their expectations of quality. They are willing to pay for a brand name that ensures the quality consumers expect. Premium price and consumer recognition is a result of incorporating brand names (Hayes, 2002). This premium compensates companies for the investments they make to produce high-quality goods. As a result, the companies are able to maintain the production of high-quality goods and to keep their good reputation (Shapiro,

Since reputation can be based on past performances (Weigelt and Camerer, 1988)., an artist’s reputation can be formed through his past performances which can be measured, for instance, in terms of education or scholarship he might have had.
Thus we assume that elite education helps building the artists’ reputation in the art market. Indeed, (Graffin & Ward, 2010) have asserted that quality signals can reduce the ambiguity in the information, developing the signaler’s reputation and thus enhancing their emission of quality.
Put it differently, visual artists’ elite educational background is expected to help them to be perceived as competent individuals with high skills, and allow them to achieve reputation among their peers; that is, visual artists having graduated from an elite art school will enjoy higher reputation than the ones who never attended this institution.
Consequently, the following hypothesis can be formulated:
Hypothesis 2: Graduation from an elite art school has a significant and positive effect on artist’s