Abstract

http://ssrn.com/abstract=2221896
 
 

References (24)



 
 

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


Ian Larkin


University of California, Los Angeles (UCLA) - Anderson School of Management

February 20, 2013

Journal of Labor Economics, Forthcoming
Harvard Business School NOM Unit Working Paper No. 13-073

Abstract:     
This paper investigates the pricing distortions that arise from the use of a common non-linear 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 where 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.

Number of Pages in PDF File: 33

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Date posted: February 23, 2013  

Suggested Citation

Larkin, Ian, The Cost of High-Powered Incentives: Employee Gaming in Enterprise Software Sales (February 20, 2013). Journal of Labor Economics, Forthcoming; Harvard Business School NOM Unit Working Paper No. 13-073. Available at SSRN: http://ssrn.com/abstract=2221896

Contact Information

Ian Larkin (Contact Author)
University of California, Los Angeles (UCLA) - Anderson School of Management ( email )
110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
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References:  24
Citations:  18
Footnotes:  16

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