Next Article in Journal
Segmentation of Laterally Symmetric Overlapping Objects: Application to Images of Collective Animal Behavior
Previous Article in Journal
On the Partition of Energies for the Backward in Time Problem of Thermoelastic Materials with a Dipolar Structure
Article Menu
Issue 7 (July) cover image

Export Article

Open AccessArticle

Optimal Incentive Contract for Sales Team with Loss Aversion Preference

1,2,3, 4 and 1,3,*
1
School of Business, Hunan University of Science and Technology, Xiangtan 411201, China
2
School of Economic Mathematics, Southwestern University of Finance and Economics, Chengdu 611130, China
3
Hunan Engineering Research Center for Intelligent Decision Making and Big Data on Industrial Development, Xiangtan 411201, China
4
School of Geosciences and Info-Physics, Central South University, Changsha 410083, China
*
Author to whom correspondence should be addressed.
Symmetry 2019, 11(7), 864; https://doi.org/10.3390/sym11070864
Received: 14 May 2019 / Revised: 19 June 2019 / Accepted: 20 June 2019 / Published: 3 July 2019
  |  
PDF [2402 KB, uploaded 3 July 2019]
  |  

Abstract

When manufacturing enterprises employ sales team (or multiple salesmen) to sell products, there is asymmetric information such as the ability and efforts salesmen. Enterprises can use contracts to incentivize salesmen to work hard to maximize their profits. Assuming that market demand is sensitive to effort, and the salesman can exploit the market by increasing effort, a multi-agent model is established for the case of symmetrical information and asymmetrical information, in which the sales team has a loss aversion preference. In this multi-agent model, the agents’ utility function is non-concave and cannot be solved by traditional methods. We use a backward stochastic differential equation (BSDE) to represent agents’ contract through the martingale representation theorem and use the stochastic optimal control and matrix method to obtain the explicit solution of the optimal contract. Based on the conclusions of the research, an empirical analysis is made on the sales team of an enterprise. View Full-Text
Keywords: sales team; information symmetry; moral hazard; loss aversion; BSDE; HJB equation sales team; information symmetry; moral hazard; loss aversion; BSDE; HJB equation
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Li, C.; Cheng, S.-J.; Cheng, P.-F. Optimal Incentive Contract for Sales Team with Loss Aversion Preference. Symmetry 2019, 11, 864.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Symmetry EISSN 2073-8994 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top