The Cost of High- Powered Incentives: Employee Gaming in Enterprise Software Sales

• 成果类型: Article
• 署名作者: Larkin, Ian
• 署名单位: University of California System; University of California Los Angeles
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/673371
• 发表日期: 2014
• 页码: 199-227
• 关键词: compensation plans; schemes; FIRMS

摘要

This article investigates the pricing distortions that arise from the use of a common nonlinear incentive scheme at a leading enterprise software vendor. The empirical results demonstrate that salespeople are adept at gaming the timing of deal closure to take advantage of the vendor''s accelerating commission scheme. Specifically, salespeople agree to significantly lower pricing in quarters in which they have a financial incentive to close a deal, resulting in mispricing that costs the vendor 6%%--8%% of revenue. Robustness checks demonstrate that price discrimination by the vendor does not explain the identified effects.