I hate haggling. It makes me anxious, and I often feel like I get ripped off. But I have a new strategy that I effectively used on my last trip abroad: figure out how much I’m willing to pay before I even ask for a price, and then stay firm to that price. Why does this help?
By coming up with a price before you even ask how much something is, you prevent yourself from being biased by anchoring. Here’s an experiment: ask someone if the Mississippi river is longer or shorter than 5000 miles. Then ask him how long he thinks it actually is. Then try it again with a different person, same questions, except instead of 5000 miles, ask if the Mississippi river is longer or shorter than 500 miles, and see how the answer to the second question changes. If you ask enough people, you should find that people usually guess around 3500 miles for those who are anchored with the 5000 mile number, while those anchored with 500 miles usually guess around 1500 miles. This effect is particularly potent when we have very few other data points to help us shape our answer, like in the case of estimating the length of the Mississippi river or when we’re trying to buy a wooden animal figurine as a souvenir in Greenmarket Square.
If I wait until after hearing a price to determine my maximum willingness to pay, then I subconsciously allow myself to be biased, which means that I’m likely to overpay and regret my purchase. By coming up with the figure before engaging in any haggling, I know that if I end up buying the item, I should be happy, since I paid no more than my maximum amount that I had predetermined, and if I don’t end up with the item, then I’m still better off since I wasn’t willing to pay any more than I had predetermined.
Of course, this all relies on the assumption that you can accurately gauge how much you’re willing to pay for something. This is often hard, so sometimes it’s easier just to say how much you’re willing to spend on someone (in the case of a souvenir), and you’ll only buy it if you think the person you have in mind would really enjoy it.
My real-life example: in Korea, I saw a hoodie that I wanted. Before I even started haggling, I had predetermined that I would be willing to spend 20,000 won on it (roughly $20). When I asked the price, the first number the salesman showed me was 40,000 won, twice as much as I was willing to pay. I said that that was too much, and he dropped his price to 38,000. Again, I told him it was too much for me, so he dropped to 36,000. When I refused again, he said that he could give it to me for 33,000 won if I paid in cash, his final offer. Since it looked like we wouldn’t come to an agreement, I just started to walk away. He then asked me what I was willing to pay, so I told him 20,000, and he accepted. I walked away happy.
What have been your experiences with haggling? Do you have any favorite tips that I didn’t cover?