We present a model where firms compete for scarce managerial talent ("alpha") and managers are risk-averse. When … managers cannot move across firms after being hired, employers learn about their talent, allocate them efficiently to projects … and provide insurance to low-quality managers. When instead managers can move across firms, firm-level coinsurance is no …

We present a model where firms compete for scarce managerial talent ("alpha") and managers are risk-averse. When … managers cannot move across firms after being hired, employers learn about their talent, allocate them efficiently to projects … and provide insurance to low-quality managers. When instead managers can move across firms, firm-level coinsurance is no …

rewards managers for pursuing risky strategies but fails to exact penalties for decision making that leads to bank failures …

incentivizes managers to perform better and thus saves on the cost of providing pay for performance. However, when managerial … talent is scarce, firms compete to attract better managers. This reduces an individual firm's incentives to invest in … by other firms' governance. In equilibrium, better managers end up at firms with weaker governance, and conversely …

affected by, the choice of governance by other firms. Firms with weaker governance offer managers more generous incentive …