Ratchet Effect
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A Ratchet Effect is an human process that is difficult to reverse.
References
2021
- (Wikipedia, 2021) ⇒ https://en.wikipedia.org/wiki/Ratchet_effect Retrieved:2021-4-20.
- A ratchet effect is an instance of the restrained ability of human processes to be reversed once a specific thing has happened, analogous with the mechanical ratchet that holds the spring tight as a clock is wound up. It is related to the phenomena of featuritis and scope creep in the manufacture of various consumer goods, and of mission creep in military planning.
In sociology, "ratchet effects refer to the tendency for central controllers to base next year's targets on last year's performance, meaning that managers who expect still to be in place in the next target period have a perverse incentive not to exceed targets even if they could easily do" (Bevan and Hood 2006, p. 521).
- A ratchet effect is an instance of the restrained ability of human processes to be reversed once a specific thing has happened, analogous with the mechanical ratchet that holds the spring tight as a clock is wound up. It is related to the phenomena of featuritis and scope creep in the manufacture of various consumer goods, and of mission creep in military planning.
2020
- https://www.investopedia.com/terms/r/ratchet-effect.asp
- QUOTE: ... The ratchet effect is an economic process that is difficult to reverse once it is underway or has already occurred. A ratchet is an analogy to a mechanical ratchet, which spins one way but not the other, in an economic process that tends to only work one way. The results or side effects of the process may reinforce the cause by creating or altering incentives and expectations among participants.
A ratchet effect is closely related to the idea of a positive feedback loop. In addition, like releasing a mechanical ratchet used to compress a spring, the reversal of an economic process that involves a ratchet effect may be rapid, forceful, and difficult to control. ...
- QUOTE: ... The ratchet effect is an economic process that is difficult to reverse once it is underway or has already occurred. A ratchet is an analogy to a mechanical ratchet, which spins one way but not the other, in an economic process that tends to only work one way. The results or side effects of the process may reinforce the cause by creating or altering incentives and expectations among participants.
1985
- (Freixas et al., 1985) ⇒ Xavier Freixas, Roger Guesnerie, and Jean Tirole. (1985). “Planning under Incomplete Information and the Ratchet Effect.” The review of economic studies, 52(2).
- ABSTRACT: Central planning of production is usually performed under asymmetric information which leads to use of an incentive scheme. As the planner revises the scheme over time to take into account information provided by the firm's performance, this induces firms to underproduce to avoid more demanding schedules in the future—the ratchet effect. This paper explores this phenomenon under the realistic assumption that the planner cannot commit himself to a revision procedure. We show that the ratchet effect exists, in the sense that the planner may choose a scheme which is suboptimal from a static viewpoint in order to induce revelation, with the marginal price of output exceeding its optimal static value.