Beautiful people

The business section of the New York Times has an interesting artcile by Hal Varian summarizing recent economic research by Markus Mobius of Harvard and Tanya Rosenblat of Wesleyan Un. into why beautiful people tend to get higher pay than their plainer counterparts even in jobs where appearance seems irrelevant to job performance.

The research seems to conclude that the potential employers over-estimate the capabilities of beautiful people both because they are beautiful and because they are more self-confident than ordinary people (presumably because they are beautiful). Indeed, they are so self-confident that both they and their employers over-estimate their capabilities.

Now, wouldn't you think this would be self-correcting? The employer over-estimates beautiful person A's skills and hires and pays him/her accordingly, expecting the new employee to do more than he/she is capable of doing. New employee agrees to do the job she/he isn't capable of doing because he/she over-estimates his/her capabilities. Shouldn't that set up a near certain failure scenario? New employee fails to achieve expected performance, disappointing employer who then takes action to reduce pay of or fire the employee. Employee realizes he/he failed to achieve expected performance and loses confidence in self.

It doesn't seem to work that way though.

Do I see some parallels here to Bush?