We study dynamic contracting with adverse selection and limited commitment. A firm (the principal) and a worker (the agent) interact for potentially infinitely many periods. The worker is privately informed about his productivity and the firm can only commit to short-term contracts. The ratchet effect is in place since the firm has the incentive to change the terms of trade and offer more demanding contracts when it learns that the worker is highly productive. As the parties become arbitrarily patient, the equilibrium allocation takes one of two forms. If the prior probability of the worker being productive is low, the firm offers a pooling contract and no information is ever revealed. In contrast, if this prior probability is high, the firm fires the unproductive worker at the very beginning of the relationship.

中文翻译：

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有限承诺的动态收缩和棘轮效应

我们研究了具有逆向选择和有限承诺的动态合同。一家公司（委托人）和一名工人（代理人）可能会在无限多个时期内相互作用。工人私下被告知他的生产力，公司只能承诺短期合同。棘轮效应是存在的，因为当公司了解到工人的生产力很高时，它有动力改变贸易条件并提供更高要求的合同。当各方变得任意耐心时，均衡分配采用两种形式之一。如果工人生产的先验概率很低，则公司提供联合合同，并且不会透露任何信息。相反，如果这个先验概率很高，公司会在关系一开始就解雇非生产性工人。