IEOR-DRO Seminar: Kinshuk Jerath (Columbia)

October 10, 2017 | 1:10pm - 2:00pm

IEOR-DRO Seminar: Kinshuk Jerath (Columbia)

209 Warren Hall
Kinshuk Jerath (Columbia Business School’s Marketing Division) will present Salesforce Contracting Under Supply Uncertainty.
 
Abstract: A firm contracts with a salesperson who exerts effort to increase uncertain demand when product supply is uncertain and may be limited. Unmet demand is unobservable so that the signal of effort is censored in expectation. The optimal contract has an extreme form in which a bonus is provided only for achieving the highest sales outcome, even if low realized sales are due to low realized supply. If the firm's supply-related actions are unobservable, double-sided moral hazard emerges, which makes the optimal contract smoother. Under certain conditions, the firm prefers to postpone contracting until after supply is realized.


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