The ratchet principle. A multi-period flexible incentive scheme

Tikva Darvish; Nava Kahana

doi:10.1016/0014-2921(89)90036-6

The ratchet principle. A multi-period flexible incentive scheme

Tikva Darvish, Nava Kahana

Department of Economics

Bar-Ilan University

Research output: Contribution to journal › Article › peer-review

5 Scopus citations

Abstract

Using a two dimensional graphic model it is shown that the Soviet fixed incentive scheme does not function in a T-period model even under conditions of certainty. By allowing the incentive coefficient to change over time, the ratchet effect can be eliminated thereby inducing all the managers to work at full capacity.

Original language	English
Pages (from-to)	51-57
Number of pages	7
Journal	European Economic Review
Volume	33
Issue number	1
DOIs	https://doi.org/10.1016/0014-2921(89)90036-6
State	Published - Jan 1989

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abstract = "Using a two dimensional graphic model it is shown that the Soviet fixed incentive scheme does not function in a T-period model even under conditions of certainty. By allowing the incentive coefficient to change over time, the ratchet effect can be eliminated thereby inducing all the managers to work at full capacity.",

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The ratchet principle. A multi-period flexible incentive scheme

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