Your rental car example reminds me of my own "pizza dinner for the team" example. A company I used to work for would order pizza on Thursdays for folks who were working late. No paperwork, no expenses, no manager approval--at 7PM on Thursday, 5-6 boxes of pizza would show up in the break room, and people would spend a little more time at work hacking away. Win win. As the company grew, of course, people being idiots, the free pizza got abused. People would walk into the break room at 7:01, take an entire box, and leave the office. So, sure enough, free pizza night ended.
Because it's easier to just forbid than eat the cost or (heaven forbid!) talk to people.
How much was this pizza costing the company? Pennies in the grand scheme of things. How much were the rental cars costing? Pennies. Probably a rounding error in even the smallest department's budget. You can afford to hire an army of engineers making $100K each, but $10 pizza is where you draw the line? $100 rental cars? Really???