We examine training and recruitment policies in a two period model that nests two forms of production, quot;routinequot; work where ability and effort are substitutes and quot;creativequot; work where they are complements. Alternative ways of improving average ability have opposite implications...

An agent can exert effort to improve the quality of a signal that also depends on his ability. The signal will help him to choose an action, which, in turn will lead to some observable good or bad outcome. Transparency on actions can distort the agent's choices towards quot;smartquot; actions...