Can Job Rotation Eliminate the Ratchet Effect: Experimental Evidence

35 Pages Posted: 10 Apr 2020 Last revised: 15 Sep 2022

See all articles by Chen Wei

Chen Wei

Washington University in St. Louis

Date Written: October 1, 2020


Regularly rotating agents between jobs in firms may lower the ratchet effect. Specifically, job rotation could disentangle the influence of current performance on agents' future incentives. In this paper, we conduct a controlled experiment to test the effectiveness of job rotation in eliminating the ratchet effect. Additionally, we compare effort provision between the situation where agents are rotated exogenously and the situation where the principal rotates agents endogenously. We find that the ratchet effect is effectively reduced when workers are informed that they will be rotated in the future. Contrary to the theoretical prediction, the ratchet effect is also significantly reduced when a principal has a costly option of rotating agents.

Keywords: Principal-Agent Model, Ratchet Effect, Job Rotation, Perfect Bayesian Equilibrium

JEL Classification: C91, C92, D23, M55

Suggested Citation

Wei, Chen, Can Job Rotation Eliminate the Ratchet Effect: Experimental Evidence (October 1, 2020). Journal of Economic Behavior and Organization, Volume 180, Dec 2020, Pages 66-84, Available at SSRN: or

Chen Wei (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics