Author Abstract
This paper provides a comprehensive model of an agent’s behavior in response to multiple sales management instruments, including compensation, recruiting/termination, and training. The model takes into account many of the key elements that constitute a realistic sales force setting: allocation of continuous effort, forward-looking behavior, present bias, effectiveness of training, and employee selection and attrition. The paper provides insights into the way that employee training, recruiting policies, and various compensation components affect both the selection and performance of heterogeneous sales agents. In addition, the paper provides two key methodological contributions. First, we provide identification results for dynamic models with continuous and unobserved choice variables, which arise in many empirical applications but are often ruled out due to theoretical intractability. Second, we consider a hyperbolic discounting model as well as an exponential discounting model and provide conditions under which each model is identified. The key to identification is that, under a multi-period nonlinear incentive scheme, an agent’s proximity to a goal affects only future payof
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: June 2019
- HBS Working Paper Number: HBS Working Paper #19-122
- Faculty Unit(s): Marketing
