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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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