The Effectiveness of Field Price Discretion: Empirical Evidence from Auto Lending
研究总部授予销售人员的定价自由裁量权对利润的影响，发现现场调整价格平均提升利润11%，但集中式数据驱动定价系统可进一步提升至20%。
In many markets, it is common for headquarters to create a price list but grant local salespeople discretion to negotiate prices for individual transactions. How much (if any) pricing discretion headquarters should grant is a topic of debate within many firms. We investigate this issue using a unique data set from an indirect lender with local pricing discretion. We estimate that the local sales force adjusted prices in a way that improved profits by approximately 11% on average. A counterfactual analysis shows that using a centralized, data-driven pricing optimization system could improve profits even further, up to 20% over those actually realized. This suggests that centralized pricing—if appropriately optimized—can be more effective than field price discretion. We discuss the implications of these findings for auto lending and other industries with similar pricing processes. This paper was accepted by Serguei Netessine, operations management.