I study how education affects the allocation of talent into different sectors of the economy. I focus on two forces. First, education adds to a worker's information capital and, thus, may change her self-confidence. Second, performance contracts give a worker incentives to choose a sector...

This article considers a Lazear-Rosen tournament model where agents can influence both the spread of their output distribution (risk taking) and its mean. The unique equilibrium induces excessive risk taking and a low level of effort. By modifying the tournament to give the highest prize to the...