The Ratchet principle: A diagrammatic interpretation

Tikva Darvish, Nava Kahana

    Research output: Contribution to journalArticlepeer-review

    1 Scopus citations


    Using a two-period graphic model it is shown that the Soviet fixed incentive scheme does not function, even under conditions of certainty. Allowing the incentive coefficient to change over time will not necessarily induce the manager to work efficiently. Only when the target is feasible for both periods will a flexible incentive scheme function.

    Original languageEnglish
    Pages (from-to)245-249
    Number of pages5
    JournalJournal of Comparative Economics
    Issue number2
    StatePublished - Jun 1987


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