ratchet effect

Popular Terms
Tendency of people to be influenced by the previous highest (or best) level of a factor (variable). For example, workers' satisfaction from the current salary increment depends on how it compares with the highest increment received in the past.

Use 'ratchet effect' in a Sentence

You need to understand how a ratchet effect may change the market and quickly adapt to it as best you can.
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Even though John received a 4% increase in salary this year, it was not quite as good as the 8% he got a few years ago. This ratchet effect caused him to not enjoy the raise as much as before.
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The ratchet effect of reducing the size of a large soda, is people now feel like they are not getting their moneys worth of the product.
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