This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 99 No. 3 (June 2009)

AER Volume. 99, Issue 3 | leftPrevious ArticleNext Articleright

Expand

Quick Tools:

Print Article Summary Email Link to this Article Export Citation
Sign up for Email Alerts Follow us on Twitter

Explore:

AER - All Issues

AER Forthcoming Articles

Misselling through Agents

Article Citation

Inderst, Roman, and Marco Ottaviani. 2009. "Misselling through Agents." American Economic Review, 99(3): 883-908.

DOI: 10.1257/aer.99.3.883

Abstract

This paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents: prospecting for customers and advising on the product's "suitability" for the specific needs of customers. When structuring salesforce compensation, firms trade off the expected losses from "misselling" unsuitable products with the agency costs of providing marketing incentives. We characterize how the equilibrium amount of misselling (and thus the scope of policy intervention) depends on features of the agency problem including: the internal organization of a firm's sales process, the transparency of its commission structure, and the steepness of its agents' sales incentives. (JEL M31, M37, M52)

Article Full-Text Access

Full-text Article

Authors

Inderst, Roman (Johann Wolfgang Goethe U Frankfurt)
Ottaviani, Marco (Northwestern U)

JEL Classifications

M31: Marketing
M37: Advertising
M52: Personnel Economics: Compensation and Compensation Methods and Their Effects


American Economic Review



AEA Member Login:


Quick Tools:

Email Link to this Issue

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AER - All Issues

AER - Forthcoming Articles

AEA Journals

Virtual Field Journals

AEAweb | AEA Journals | Contact Us