Incentives to Discover Talent

26 Pages Posted: 7 Oct 2019

See all articles by Tobias Bruenner

Tobias Bruenner

University of Lincoln (UK)

Guido Friebel

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Richard Holden

University of New South Wales (UNSW)

Suraj Prasad

The University of Sydney

Date Written: September 2019

Abstract

We study an agent's incentives to discover where her talents lie before putting them to productive use. In our setting, an agent can specialize and learn about the same type of talent repeatedly, or experiment and learn about different types of talent. When talents are normally and symmetrically distributed we find that experimentation is efficient, regardless of one's initial draw of talent. Competitive labor markets encourage experimentation whereas monopsonistic labor markets induce specialization. Relaxing our assumptions of normality and symmetry in the distribution of talents, and allowing for human capital acquisition, provides a role for specialization in discovering talents.

Suggested Citation

Bruenner, Tobias and Friebel, Guido and Holden, Richard and Prasad, Suraj, Incentives to Discover Talent (September 2019). CEPR Discussion Paper No. DP13979, Available at SSRN: https://ssrn.com/abstract=3464506

Tobias Bruenner (Contact Author)

University of Lincoln (UK) ( email )

Lincoln LN2
United Kingdom

Guido Friebel

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Richard Holden

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Suraj Prasad

The University of Sydney ( email )

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