Talent vs. Fit: Partner Selection and the Moderate's Trap

We study partner selection when higher productivity comes at the cost of weaker expected collaborative fit. When this tradeoff is strong, expected surplus is U-shaped: both high-productivity "difficult stars" and low-productivity "team players" generate higher expected value than moderately productive partners. This Moderate's Trap overturns the standard economic prediction that surplus increases monotonically with talent. In competitive labor markets, moderate workers are disadvantaged, and workers invest to specialize at the extremes, polarizing the productivity distribution. Our framework microfounds a demand-side force that operates against moderate performers, complementing existing technology-based explanations of modern labor market polarization and specialization.