This paper presents a screening model of education in which students having private information about their innate abilities are noisily tested in school. The aim is to explore the effect of noise on the screening equilibrium. By assuming that labour contracts take the form of reward schedules...

. We analyze the incidence in student’s effort from implementing two different reward systems: a standard-based model and a tournament. In the former we work in detail the effects on effort due to changes in rewards, risk level, socieconomic background and passing standard, while in the later...