---Insert Table 2 here--- From the first column of Table 2, the second period profit is given by, 2G =. Note that this is the second period profit on . Recall that  is essentially sales conditional firm’s differences between New and Existing customers in period 1. The firm must eventually calculate the ex-ante second period profit as anticipated at the beginning (prior to unconditional expected observing Using the fact that is distributed N(0, 2V), the expected second period variables Δ). Δ anticipated at the beginning of period 1 are found in the second column of Table 2. The expected profit is =. ( A larger value for V corresponds to more heterogeneous customers, but the firm can measure the level of demand via before committing to effort, commission rate, prices and  production. The adaptability of the generalist implies that it can magnify the good situations and mitigate the bad (as described in the numerical illustration on pages 6-8). Even though uncertainty hurts the risk-averse sales force, the adaptability overcomes this disadvantage. Proposition 2: The expected second period profit (21) increases in the firm’s uncertainty about the attitude-toward-the-brand, var(tg)=V . customers’ While Proposition 1 demonstrates the abstract point that signals of random demand can be used to tailor prices in such a way that profit increases in uncertainty, Proposition 2 illustrates this insight in the specific practical situation of choosing between a generalist and specialist sales force in which such a signal occurs naturally. Proposition 2 is contrary to the well-known result of the standard principal agent model that profit decreases in uncertainty. The reason for the counter-intuitive finding lies in adaptable
---Insert Table 2 here--- From the first column of Table 2, the second period profit is given by, 2G =. Note that this is the firm’s second period profit conditional on . Recall that  is essentially sales differences between New and Existing customers in period 1. The firm must eventually calculate the ex-ante unconditional expected second period profit as anticipated at the beginning (prior to observing Δ). Using the fact that Δ is distributed N(0, 2V), the expected second period variables anticipated at the beginning of period 1 are found in the second column of Table 2. The expected profit is =. ( A larger value for V corresponds to more heterogeneous customers, but the firm can measure the level of demand via  before committing to effort, commission rate, prices and production. The adaptability of the generalist implies that it can magnify the good situations and mitigate the bad (as described in the numerical illustration on pages 6-8). Even though uncertainty hurts the risk-averse sales force, the adaptability overcomes this disadvantage. Proposition 2: The firm’s expected second period profit (21) increases in the uncertainty about the customers’ attitude-toward-the-brand, var(tg)=V . While Proposition 1 demonstrates the abstract point that signals of random demand can be used to tailor prices in such a way that profit increases in uncertainty, Proposition 2 illustrates this insight in the specific practical situation of choosing between a generalist and specialist sales force in which such a signal occurs naturally. Proposition 2 is contrary to the well-known result of the standard principal agent model that profit decreases in uncertainty. The reason for the counter-intuitive finding lies in adaptable