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The paper provides a formal rationale for the common practice of using sales assistance. The argument is made in a model where a consumer's situation determines his needs. The products are differentiated and the map identifying the best match between a consumer's situation and a product is known only to the sales assistant. I look at procedure which involves the consumer revealing his needs and the sales assistant identifying the best matching product. This is compared to several other procedures and found to be best when the number of possible consumer situations is large. It is shown that reputational considerations may keep the sales assistant honest. I look at the impact of guarantees and other modifications to the model and discuss normative implications.
Birger Wernerfelt (Tue,) studied this question.