The difference is that it's admitting that in some areas the managers/consumers can discern between good and bad, just not in every area. It's a bit closer to, "it's not what you know but who you know, when nobody else knows anything."

When a non-technical manager hires his nephew to write PhP, he isn't thinking "I love my nephew so much that I am willing to sacrifice our company's technology plan to help his career," he's thinking, "I have no idea how to evaluate web developers, so I might as well hire my nephew." Cynically, most people serve themselves first - so if you find them serving an in-group of the fashionable or blood-related it's often because they don't know how to serve themselves.

I don't see how this is "cynical". If you have no way to discern the difference between good and bad employees, it makes sense to at least hire somebody you know.

The thing is, though, that performance can be measured, to a degree: if a 'forger' produces an original work that passes as the work of an acknowledged master, then, in purely performance terms, the two artists could be regarded as being at the same level, and if the art world were only interested in performance, it would not care about provenance.

Works of art are more than just the objects themselves, however. In particular, works that have expanded the boundaries of what is regarded as art have value as historical artifacts, and the artist who created them reached a higher level of performance, on that particular work (as originality is an important aspect of performance), than those producing works that follow the pattern (including that artist, when producing subsequent works in the same vein.)

This point of view would assign considerable value to Duchamp's original 'Fountain', but not much to a replica, which would compare unfavorably to other, original, examples of signed plumbing. If you want a replica of it, there's probably more intrinsic value in making one for yourself than in buying one.

The art world assigned zero value to the original Fountain and $17 million to one of a number of reproductions.

Indeed - when history is an aspect of value, values will change over time. I would be very interested if the replicas' value holds up, though not particularly surprised if it does, as my previous post was not intended to be a description of how things work, but more of a speculation of how things might work if performance was valued above all else.

When things like art are hard to qualify, it seems it’s rasy to fall back on reputation. It seems a similar thing happens with investment. Have they had success in the past, with that do they have what it takes to succeed in the future?

It’s imperfect, but without a crystal ball, what else can you use as proxy given the unknowns?

Actually I think network will drive success even if talent has some measure - but if talent evens out the one with the better network will likely triumph.