What I Learned from a Moroccan Carpet Merchant
How to haggle from a position of ignorance.
Posted Dec 03, 2011
Getting lost is one way to learn.
~ Rosamel Benavides-Garb
I bought two rugs in Morocco, but the first purchase revealed a depth of naivité within me that is too painful to share. Let's just say that I overpaid. A couple of days later, I took the train from Rabat to Fes, which is Morocco's historic capital and it has what is recognized as the best preserved medina (old town) in the Arab world. At the Fes railway station, I asked a taxi driver to take me to the medina, not knowing that the area is huge and that it has many gates. The cabbie made the reasonable inference that I would want to start my walkabout where all tourists do, namely at the Blue Gate. Once through the gate, I entered another world, a warren of alleys and byways so complex, narrow, and intricate that King Minos would have blanched at the sight. I had been told that I should expect to get lost, but I did not anticipate being lost within the first two minutes. I had also been told only to hire a guide with an official badge. Otherwise, I, or my unauthorized guide, might be fined.
Soon a young man, an adolescent really, started talking to me. He was friendly, inquisitive, and persistent. My options were to ignore him, rebuff him, or letting myself be drawn into a conversation and hence a relationship. As my whole approach on this trip (and hopefully elsewhere) was not to offend, I gradually began to respond. Would I want to see a place where tanning and weaving was going on? Sure, why not. Saad led me through the maze in what felt like a crazy zig-zag route. Along the way he pointed out interesting sights. It became clear to me that I had been baited and hooked, and that I was being reeled in. From the looks of other passersby I could tell that this was all too evident.
After a while, the choices were narrowed down to a handful of options and then I indicated that I was interested in the red rug with the Berber pattern (as if this told you anything). I realized that I had no clue what this item might be worth. More precisely, I had no idea what the merchant's "reservation price" was, that is, the bare minimum he would be willing to sell it for. Perhaps it was this deep ignorance that led me to allow him to make the first offer. This was not a clever move because we know that he who makes the initial offer can use the power of setting an anchor. The higher Yousef would place his initial asking price, the more I would pay in the end, regardless how skillfully I negotiated.
And here is the crucial asymmetry: For Yousef the scale had no well-defined ceiling. Actually, it had no ceiling at all. He could have asked for a million dirham ($1 = 8DH) and we would have had a good laugh. For me, however, the scale was bounded at the floor of zero. Without being completely irrational, I could not offer less than zero ("Hey Yousef, give me the rug and throw in a couple of hundred dirham!") and it did not occur to me to offer 5DH for fear of offending Yousef and looking like an idiot at the same time. Yousef later explained to me that he would not have taken offense at any non-zero offer. He understood that the initial numbers are fantasy numbers, and the Berber way is to keep smiling while working toward a consensus.
Yousef wrote his initial number on a piece of paper and after way-too-long deliberation within myself, I made a counteroffer, which was 33% of his. How proud I was that I had the guts to counter with less than 50%. Yousef said "I will now ignore your number," and wrote down his second offer, which was quite a bit lower than his initial one. Thinking that I was learning, I announced "I will now ignore your number" and jotted down a concession that was smaller than his concession. I was beginning to feel pretty good because it looked like he was yielding more ground than I was. After another couple of rounds of "ignoring" and writing, I declared what I intended to be my final offer, which was exactly 50% of the initial asking price. In response, Yousef said something like "Make one more adjustment and we have a deal." Again, thinking that I had successfully toughened with experience I offered to raise by 50DH. This was not much, but I did not expect Yousef to break his composure. After all, I had done what he suggested. He did indeed remain calm and we had a deal, shook hands, and the carpet was rolled up.
Unless I hire an appraiser to put a "real" price on my rug, I will never know its true value. I will not hire an appraiser because her fee will add to the price of the rug and I am in no mood to haggle with her. I am quite happy with the rug. What matters to me now is the psychological lesson.
Remember what we already know about anchoring and adjustment. Yousef nicely capitalized on this heuristic. He enjoyed three advantages.  Anchoring effects increase with the judge's state of uncertainty. When the buyer is ignorant about the price of rugs, a high anchor can work miracles for the seller.  Being the seller, Yousef could push the anchor as high as he pleased. I was bound by zero (the noted asymmetry).  He made the first move. My counter anchor at the low end could only be in theory, but not psychologically, independent of his first move. But perhaps the biggest lesson that Yousef taught me that day was that he - as he said he would - kept smiling and being courteous throughout the process. Some negotiators try to impress and intimidate by vivid emotional displays. Yousef's quietly confident way, his blending of teaching and bargaining, seems to be the better way. Psychologically, it felt like a win-win situation. And then, of course, there was the mint tea.
What about Saad? When I left the shop with rug in hand, Saad was ready to take me back to the Blue Gate. As I had suspected, the way back was a fraction of the way in. The approach had indeed been a roundabout affair designed to either show me the sights or disorient me. It did both. As we approached the Blue Gate, I had a sense that Saad would be expecting a fee. Besides the fact that I was virtually tapped out, I had the grumbling feeling that I had just handsomely contributed to Saad's family business and wasn't that enough? So I offered a modest amount that seemed reasonable for an hour's work under the circumstances. Saad demanded three times as much and he seemed upset. In a way, this was reassuring to me because apparently, I was not the last person in Morocco who still needed to learn the art of negotiation. What Saad had to learn was to keep his emotions in check, and, most of all, to negotiate before delivering a service.