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The ratchet effect and the probability of proceeding to the next stage: An experiment

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  • Shigeo Morita
  • Tomoharu Mori

Abstract

The ratchet effect is an economic phenomenon where agents strategically restrict their efforts to conceal information on their characteristics under the dynamic setting. This study experimentally examines the effect of the probability of proceeding to the next stage on ratcheting behavior. We find evidence that if the probability is smaller than 1, the ratchet effect is mitigated.

Suggested Citation

  • Shigeo Morita & Tomoharu Mori, 2024. "The ratchet effect and the probability of proceeding to the next stage: An experiment," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 797-812, July.
    • Handle: RePEc:bla:buecrs:v:76:y:2024:i:3:p:797-812
    DOI: 10.1111/boer.12448
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    References listed on IDEAS

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    1. Gary Charness & Peter Kuhn & Marie Claire Villeval, 2011. "Competition and the Ratchet Effect," Journal of Labor Economics, University of Chicago Press, vol. 29(3), pages 513-547.
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    5. David Gill & Victoria Prowse, 2016. "Cognitive Ability, Character Skills, and Learning to Play Equilibrium: A Level-k Analysis," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1619-1676.
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    7. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
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    9. Wei, Chen, 2020. "Can job rotation eliminate the Ratchet effect: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 66-84.
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