The Ratchet principle: A diagrammatic interpretation

Tikva Darvish, Nava Kahana

Research output: Contribution to journalArticlepeer-review

2 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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