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Persuasion and empathy in salesperson-customer interactions

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  • Julio J. Rotemberg

Abstract

In a search model, prospects encounter salespeople who can try to persuade them. Persuasive messages can increase the utility of buying or increase the cost of not buying. The latter reduces welfare. Equilibria where only some salespeople make a persuasive effort often exist. Salespeople vary in their empathy, and choose their jobs accordingly. When all prospects are persuadable, a negative correlation between empathy and sales suggests that persuasion increases the cost of not buying. When only some are, messages that increase the utility of purchasing can reduce welfare. They can also lead to a negative correlation between empathy and sales.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15975.

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Date of creation: May 2010
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Handle: RePEc:nbr:nberwo:15975

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  1. Kfir Eliaz & Ran Spiegler, 2004. "Contracting with Diversely Naïve Agents," Levine's Bibliography 122247000000000530, UCLA Department of Economics.
  2. Laibson, David I. & Gabaix, Xavier, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," Scholarly Articles 4554333, Harvard University Department of Economics.
  3. Rajiv Lal & V. Srinivasan, 1993. "Compensation Plans for Single- and Multi-Product Salesforces: An Application of the Holmstrom-Milgrom Model," Management Science, INFORMS, vol. 39(7), pages 777-793, July.
  4. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July.
  5. Becker, Gary S & Murphy, Kevin M, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 941-64, November.
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Cited by:
  1. Armstrong, Mark & Zhou, Jidong, 2010. "Exploding offers and buy-now discounts," MPRA Paper 24849, University Library of Munich, Germany.
  2. Bühler, Stefan & Halbheer, Daniel, 2011. "Persuading Consumers With Social Attitudes," Economics Working Paper Series 1117, University of St. Gallen, School of Economics and Political Science.

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