Persuasion and empathy in salesperson-customer interactions

Julio J. Rotemberg

NBER Working Paper No. 15975
Issued in May 2010
NBER Program(s):   IO

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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Document Object Identifier (DOI): 10.3386/w15975

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