Charness, Gary; Kuhn, Peter J.; Villeval, Marie-Claire - Institute for the Study of Labor (IZA) - 2008
The 'ratchet effect' refers to a situation where a principal uses private information that is revealed by an agent ….
JEL Classification: C91, D23, D82, J24, L14
Keywords: ratchet effect, competition, experiment, private information … action and has private information, and binding multi-
period contracts are not enforceable. In such situations, the ratchet …