This paper studies motivational crowding-out effects after financial incentives are lowered. In a real-effort setting, workers receive a piece rate before financial incentives are substituted by a one-time payment. Under the fixed payment, effort is significantly lower only when preceded by...

The "ratchet effect" refers to a phenomenon where workers whose compensation is based on productivity strategically restrict their output, relative to their capability, because they rationally anticipate that high levels of output will be met with increased or "ratcheted-up" expectations in the...

The "ratchet effect" refers to a phenomenon where workers whose compensation is based on productivity strategically restrict their output, relative to their capability, because they rationally anticipate that high levels of output will be met with increased or "ratcheted-up" expectations in the...