In the first week of November, I was an invited speaker at the Cognition Emotion and Motivation conference that is in Tunisia every two years. Most of the attendees at the meeting were from Tunisia or from other French speaking countries. So, the conference was a great way to catch up on research being done that is not typically published in the Psychology journals published in English. I will have more to say about that in a future post.
But, first, a few words on haggling and why it is so difficult to do well.
Because I had never been in Tunisia before, I wanted to bring home some souvenirs for the family. And that required walking through the market. I walked into one shop that had some nice jewelry and picked out a pair of inexpensive earrings. I know they are inexpensive, because I have seen similar ones in shops in the US. You can usually get them in the US for between $5 and $7. The shopkeeper made a big show of treating me like a valued friend and then suggested that these earrings could be had for the special price of 152 dinar (about $120). Now, I was prepared for having to haggle a bit over the price, but I do think my jaw hit the floor at a markup of 24 times the expected price. Eventually, we settled on something more reasonable (like 7 dinar), but that required an extended discussion, repeated threats to walk to the shop next door, and more than a little stress.
This small encounter, though represented a lot of what makes it difficult for people to negotiate in many situations in life. I'll focus on two here.
The first is a process called anchoring and adjustment. Sometimes we know the value of something, because we have seen it before. For example, having seen earrings like the ones in the stall, I was pretty confident I knew their value. Often, though, we are not entirely certain. We have a vague idea, but we need some guidance from the world. For example, when people are on the game show The Price is Right, they make guesses about the value of a product on display. The first person makes a bid. The second person, can then use the first person's bid as an anchor. They might think that the actual price is really higher than that anchor, and so they will adjust it a bit to get into the neighborhood of the actual price.
A lot of research suggests that people perform this kind of anchoring and adjustment, but they end not to adjust enough. So, when the shopkeeper says that the price of the earrings is 152 dinar, that is clearly too high, and you will adjust that price downward. But unless you know the real value of the earrings, you are unlikely to adjust enough. So, you might end up at 20 dinar or 40. You'll still feel like you are getting a bargain, because the anchor was set so high.
The second factor is the social situation. The shopkeeper does not set up an antagonistic situation. He is your friend. He invites you in. He calls you friend. He speaks conspiratorially about the other shopkeepers who are dishonest.
Now, of course, you have a relationship with this person. And most of us want to please others. When the shopkeeper acts offended at our counter offer, we feel as though we have done something wrong. Of course it is an act on his part. But he is more skilled at these interactions, having hundreds of them every week. For us, we have to overcome our natural tendency to be cooperative in conversation in order to haggle effectively.
What is amazing is how powerful just these two elements of behavior can be. When standing with a shopkeeper you have never met before and will never meet again, it is still difficult to hold your ground, to threaten to leave the shop or even to actually leave.
So what can you do to haggle (or negotiate) more effectively?
First, enter any negotiation with your own sense of the value of what you are negotiating over. Do not let someone else provide the starting anchor point for establishing value. If you are going to negotiate over something like a car, check the web to find out the value of the car before going. If you find yourself in Tunisia in the market, make a guess at the value of the item before the shopkeeper says anything. Anchor your judgment on your guess rather than the shopkeeper's offer.
Second, think about your own social behavior. If you are the kind of person who is cooperative in conversation and who does not like to feel as though you have insulted others, find a negotiation partner. Bring along someone else who will drag you out of the store or shop before you spend too much. That is, fight social pressure of one kind with social pressure of another.
And if you do find yourself in the market in Tunisia and you do end up paying too much, at least you will have a good story to tell about it in the end.
