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attract unprofitable customers, particularly when salespeople have high productivity and low risk (i.e., risk aversion times … selection problem for the salespeople. By solving the moral hazard and adverse selection problems simultaneously, we show that … to dissuade unprofitable customers, when firms hire salespeople, however, it requires lowering of both selling effort and …
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We study a scenario in which a firm designs the compensation contract for a salesperson who exerts effort to increase the level of uncertain demand and, jointly, the firm also decides the level of inventory to be stocked. We use a newsvendor-type model in which actual sales depend on the...
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