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Incentives to Discover Talent

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  • Friebel, Guido
  • Bruenner, Tobias
  • Holden, Richard
  • Prasad, Suraj

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

  • Friebel, Guido & Bruenner, Tobias & Holden, Richard & Prasad, Suraj, 2019. "Incentives to Discover Talent," CEPR Discussion Papers 13979, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13979
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    References listed on IDEAS

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    Cited by:

    1. Morimitsu Kurino & Yoshinori Kurokawa, 2024. "Job rotation or specialization? A dynamic matching model analysis," Review of Economic Design, Springer;Society for Economic Design, vol. 28(2), pages 243-273, June.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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