Meeting a target raises next period's target, so agents suppress output to avoid being ratcheted.
Berliner's finding from Soviet enterprises, and it applies wherever this year's performance sets next year's quota. The rational response is to hit the target and never exceed it visibly.
In practice
- Meeting a target raises next period's target, so agents suppress output to avoid being ratcheted.
- A team that delivers 130% of its quarterly goal is given a higher goal, and delivers exactly 100% thereafter.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
- Essay
- The regularities money obeys