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

Shigeo Morita and Tomoharu Mori

Bulletin of Economic Research, 2024, vol. 76, issue 3, 797-812

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.

Date: 2024
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