Compensation plan for competing salespersons under asymmetric information |
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| Authors: | Chung-Yee Lee Ruina Yang |
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| Institution: | Cheong Ying Chan Professor of Engineering, Department of Industrial Engineering and Logistics Management, Hong Kong University of Science and Technology, Hong Kong; School of Management, Xi’an Jiaotong University, Xi’an, China |
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| Abstract: | We investigate the optimal compensation scheme involving one firm and two competing salespersons deployed in different territories under asymmetric information. The problem is analyzed using a two-stage game. In the first stage, the firm announces the compensation plans. The two salespersons, who are closer to customers, have superior market information and then simultaneously but independently decide which plans to sign. The firm decides the production quantity and the salespersons independently make effort decisions. In the second stage, sales volumes are realized and the associate payments are made. |
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| Keywords: | Supply chain management Competing salespersons Asymmetric information Quota-based compensation plan |
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