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Power Law Performance

Research library

The research behind Power Law Performance.

More than a century of published work in economics, statistics, marketing science and management, in one place. 117 entries across 10 themes, each with what the work found and why it matters to revenue teams, and 22 explainers on the key works.

Every entry was checked against its publisher, a DOI or a primary source in October 2026. Summaries are ours; words in quotation marks are the work's own.

  1. 11 entries Adverse selection Why does optimizing to the average buy the bottom?
  2. 11 entries Signals, screening and ordeals When does friction sort customers, and when does it sort the wrong way?
  3. 19 entries Power laws and concentration Why is the average where almost nobody is?
  4. 19 entries Customer value, acquisition and retention Why does who you acquire decide what they're worth?
  5. 7 entries Selection bias and paradoxes Why do you only see the customers you let in, and why do averages reverse?
  6. 14 entries Measurement, experiments and ad platforms Why do tests pick the wrong winner, and ad platforms the cheapest conversion?
  7. 19 entries Metrics and incentives Why do measures stop measuring once they become targets?
  8. 6 entries Matching and routing Who should meet whom?
  9. 4 entries Humans, algorithms and who decides Who should set the objective?
  10. 7 entries Correlation and causation When does a number that moves with revenue actually move it?

Required reading

Where we learned the craft.

Before the research, the practitioners. 11 books and writers that formed how we market, from the first psychology lab and the first copy tests to Cialdini, Godin, Taleb and Hillstrom: what each one taught us and where it shows up here.

  1. Principles of Physiological Psychology Wilhelm Wundt · 1873–74
  2. Reason-Why Advertising John E. Kennedy · 1905
  3. Scientific Advertising Claude C. Hopkins · 1923
  4. Breakthrough Advertising Eugene M. Schwartz · 1966
  5. Ogilvy on Advertising David Ogilvy · 1983
  6. The Adweek Copywriting Handbook Joseph Sugarman · 2007
  7. Great Leads Michael Masterson & John Forde · 2011
  8. Influence: The Psychology of Persuasion Robert B. Cialdini · 1984
  9. All Marketers Are Liars, and his blog Seth Godin · 2005; blog since 2002
  10. Hillstrom's Database Marketing, and MineThatData Kevin Hillstrom · 2006
  11. The Black Swan Nassim Nicholas Taleb · 2007

The whole shelf, with why each one is on it

Our explainers

The key works, in plain terms.

What each one found, in the authors' own words where it matters, and where it shows up in a revenue team. Each links to the original.

  1. Adverse selection Why the Average Price Buys the Lemons. George A. Akerlof, 1970
  2. Power laws and concentration The 80/20 Rule Isn't Pareto's. Vilfredo Pareto, 1896–97; J. M. Juran, 1951 and 1975
  3. Customer value, acquisition and retention Nobody Got More Loyal. Peter S. Fader and Bruce G. S. Hardie, 2007
  4. Selection bias and paradoxes The Total Can Point the Wrong Way. E. H. Simpson, 1951; P. J. Bickel, E. A. Hammel and J. W. O'Connell, 1975
  5. Power laws and concentration Some Customers Cost You Money. Robert S. Kaplan and V. G. Narayanan, 2001; Kaplan and Robin Cooper, 1998
  6. Metrics and incentives The Most Quoted Line in Management Isn't Goodhart's. C. A. E. Goodhart, 1975; Marilyn Strathern, 1997
  7. Signals, screening and ordeals A Signal Works When It Costs the Wrong Side More. Michael Spence, 1973
  8. Signals, screening and ordeals A Small Hassle Did the Sorting. Vivi Alatas, Abhijit Banerjee, Rema Hanna, Benjamin Olken, Ririn Purnamasari and Matthew Wai-Poi, 2016
  9. Power laws and concentration Performance Isn't a Bell Curve. Ernest O'Boyle Jr. and Herman Aguinis, 2012
  10. Matching and routing When Strengths Multiply, Pair Like With Like. Gary S. Becker, 1973
  11. Adverse selection Why Banks Say No Instead of Charging More. Joseph E. Stiglitz and Andrew Weiss, 1981
  12. Selection bias and paradoxes The Planes That Came Back. Abraham Wald, 1943; explained by Marc Mangel and Francisco J. Samaniego, 1984
  13. Measurement, experiments and ad platforms Your Ad Test Compared Audiences, Not Ads. Michael Braun and Eric M. Schwartz, 2025
  14. Measurement, experiments and ad platforms eBay Turned Off Its Search Ads. Thomas Blake, Chris Nosko and Steven Tadelis, 2015
  15. Correlation and causation The Question to Ask Before You Pull a Lever. Austin Bradford Hill, 1965
  16. Adverse selection One Price Can't Survive. A Menu Can. Michael Rothschild and Joseph Stiglitz, 1976
  17. Humans, algorithms and who decides The Algorithm Worked. It Was Aimed at the Wrong Thing. Ziad Obermeyer, Brian Powers, Christine Vogeli and Sendhil Mullainathan, 2019
  18. Customer value, acquisition and retention A 35% Discount Buys Customers Worth Half as Much. Michael Lewis, 2006
  19. Measurement, experiments and ad platforms The Drugs Fixed the Number. More Patients Died. Debra S. Echt et al., 1991 (the CAST trial); Thomas R. Fleming and David L. DeMets, 1996
  20. Customer value, acquisition and retention Don't Chase the Customers Most Likely to Leave. Eva Ascarza, 2018
  21. Metrics and incentives You Get What You Reward, Not What You Hope For. Steven Kerr, 1975 (updated 1995)
  22. Metrics and incentives Pay for What You Can Count and You Lose What You Can't. Bengt Holmström and Paul Milgrom, 1991

The Nobel lineage

Five prizes, one idea.

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded five times for work this library draws on. Citations from nobelprize.org.

2000 James J. Heckman (shared with Daniel McFadden)“for his development of theory and methods for analyzing selective samples” You only see the customers you let in 2001 George A. Akerlof, A. Michael Spence, Joseph E. Stiglitz“for their analyses of markets with asymmetric information” Lemons, signals and screening 2007 Leonid Hurwicz, Eric S. Maskin, Roger B. Myerson“for having laid the foundations of mechanism design theory” Designing rules so the right people sort themselves 2012 Alvin E. Roth, Lloyd S. Shapley“for the theory of stable allocations and the practice of market design” Who should meet whom 2016 Oliver Hart, Bengt Holmström“for their contributions to contract theory” Incentives, measures and the multitask problem

Often misquoted

What they actually said.

  • "When a measure becomes a target, it ceases to be a good measure." (attributed to Goodhart)

    That sentence is Marilyn Strathern's, from 1997. Goodhart's own 1975 wording: "Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes." The source

  • Pareto's 80/20 rule

    Joseph Juran named the "Pareto principle," and later wrote that he had "mistakenly applied the wrong name." Concentration also varies by industry: closer to 60/20 in some packaged goods. The source

  • Wald told the Air Force to armor the places without bullet holes

    The popular version is embellished. Wald's documented work estimated aircraft vulnerability from the planes that survived. The source

  • Keep 5% more customers and profits rise 25–95%

    Reichheld and Sasser's figures are case examples from one article (their chart reads 25% to 85%), not a general law. The source

  • Costly signals are always honest (the peacock's tail)

    The "handicap principle" is now openly disputed. Spence's version, a signal works when it costs the wrong sender more, is the safer ground. The source

  • Call a lead within an hour and you're seven times as likely to qualify it

    Widely quoted from a 2011 study that compared firms. It shows leads go cold fast; it doesn't prove cause and effect. The source

New work, as we publish it.

The Power Law Performance newsletter puts this research to work: where volume KPIs pick the wrong winner, and the signals that sort value from volume.

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