Commentary on “Dynamic Incentives in Sales Force Compensation”

Xiangyin Kong (), Qi Cheng () and Yimin Yu ()
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Xiangyin Kong: International Institute of Finance, School of Management, University of Science and Technology of China, Anhui 230026, People’s Republic of China
Qi Cheng: International Institute of Finance, School of Management, University of Science and Technology of China, Anhui 230026, People’s Republic of China; College of Business, City University of Hong Kong, Kowloon, Hong Kong Special Administrative Region
Yimin Yu: College of Business, City University of Hong Kong, Kowloon, Hong Kong Special Administrative Region

Marketing Science, 2024, vol. 43, issue 1, 229-231

Abstract: We show that the Hamilton-Jacobi-Bellman (HJB) equation for the salesperson’s problem is not correct because of the effect of a positive discount factor for the infinite-horizon risk-sensitive control. As a result, their analyses and insights are incorrect. We present the correct HJB equation for the salesperson’s problem, which is a partial differential equation. Thus, further investigation on the correct solutions is needed to better understand the problem.

Keywords: sales force; compensation; sales dynamics; agency theory; differential games (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:43:y:2024:i:1:p:229-231

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