A ratchet only turns one way. In economics, the ratchet effect is the tendency for levels of effort, cost, or commitment to move up and then stick. Past performance becomes the...
The core idea
A ratchet only turns one way. In economics, the ratchet effect is the tendency for levels of effort, cost, or commitment to move up and then stick. Past performance becomes the...
Connected
Asymmetric Payoffs
situations where the upside is uncapped and the downside is limited. The expecte
Barriers to Entry
obstacles preventing new competitors from entering a market.
Collective Action Problem
incentives to free-ride undermine cooperation for shared benefit.
Comparative Advantage
where your opportunity cost is lowest, not where you are best.
Creative Destruction
destroys established industries to create new, more valuable ones.
Economies of Scale
scale drives lower unit costs, creating compounding cost advantages.