The Art of Haggling and Road Trip
Trip Start
Dec 27, 2005
1
11
20
Trip End
Jan 15, 2006
Udaipur,
India
Friday, January 6, 2006
The Art of Bargaining
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We ended up in the small market w/in the palace where Gita showed us her prowess in bargaining. Bargaining is such an intensive ritual. Both sides must submit bids with imperfect and asymmetric information. The seller has to judge how likely the person is going to buy whereas the buyer has to figure out what is a fair price for the item. Often these are very different figures. For the buyer the indifferent price is low compared with his overall wealth but extremely high compared to the seller's cost of goods. Consequently merchants quote ridiculous prices and then "allow" for a "20% or so discount". In actuality the guy is making at least 200% profit.
The problem is that on principle I have an issue with overpaying. However in practice I do not like haggling nor do I like wasting so much time negotiating the price
Jaipur City Palace 1
. These merchants are professionals at getting exactly what they want. Moreover they use every trick in the book to do so (See Cialdini's "Persuasion" for an example of a book). Generally I just avoid buying stuff all together.Today Gita wanted to get some sheets and proceeded to entertain us with her haggling skills. It's amazing to watch her work. First indifferent, then assertion, then diplomacy and finally no transaction. After an hour session we walk out w/out buying anything even though she got her price (from 4200 to ~1800 rupees). The reason? Gita simply explained to us that she just wanted to see what a "fair" price in the market could possibly be. Armed with this information, we will go to other shops and hopefully get a better price.
It's funny to observe the body language between the buyer and the seller. In the states everybody tends to be pretty neutral. However in these markets the two sides cycle thorough disbelieve, disgust, assertion, pressure and many other dramatic states. Yet in the end there are no hard feelings because it's just the nature of business. Gita having experienced this when she was younger is very adapt at this ritual of negotiation. She explains that its part psychology, part business, and part research in determining the "fair" price for both parties. The key then is not to be intimidated or afraid to be assertive when necessary. Being too nice will get you killed. It's really interesting how she knew how to negotiate through experience
Jaipur City Palace 2
. It makes me wonder how useful the "business seminars or schools" really are. It seems that the easiest way to learn negotiation is not to pay some BS professional education to teach you out of a book but rather to just go do it. Probably the best lesson would be an excursion to these bazaars and have the people try to negotiate with these "professionals".From a broader perspective, one can see how a small bazaar is a microcosm of an economy. You have buyers/sellers who have imperfect and asymmetric information and are trying to determine the market price. I think some economic theorist must have mentioned this in a paper somewhere but it's nothing like seeing it up close in action.
Jaipur-Udaipur
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The distance between Jaipur and Udaipur is about 410km. In the US this would be ~4 hour trip. However in India it takes about 8 hours. The reason? Poor stretches of road and having to dodge oncoming traffic (yes, you read that right) and having to dodge people/livestock. You can imagine how scary it is for a westerner to see a sea of headlights coming straight at you at night. However over time you notice that there is a method to this madness. Through the chaos, there emerged a protocol that the drivers all adhere to. For example:
1. When you want to pass, the passing car honks as it drives by the other car.
2. When you want a car to move to allow passage, you flash the high beam.
3. When you see an oncoming car, you flash the high beam to indicate that you are going to stay on course. You use the blinkers to indicate which direction you are to swerve.
Oddly the system works! It never ceases to amaze me to imagine how such a system was created and adopted by the people. It is as if it is a model for the development of language, much like the descriptions in the book "Guns, Germs and Steel"
The 8 hour trip turned out to be blast. The 3 of us built an excellent camaraderie. Generally road trips either build friendships or break relationships. Often the latter occurs more often than the former. We were fortunate that we had a great time. It is ironic to note that I haven't had a road trip in some years and that this vacation in India is how I broke that streak!
