Bargaining
Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. Bargaining is an alternative pricing strategy to fixed prices. Optimally, if it costs the retailer nothing to engage and allow bargaining, he can divine the buyer's willingness to spend. It allows for capturing more consumer surplus as it allows price discrimination, a process whereby a seller can charge a higher price to one buyer who is more eager (by being richer or more desperate). Haggling has largely disappeared in parts of the world where the cost to haggle exceeds the gain to retailers for most common retail items. However, for expensive goods sold to uninformed buyers such as automobiles, bargaining can remain commonplace.
Dickering refers to the same process, albeit with a slight negative (petty) connotation.
Bargaining is also the name chosen for the 3rd stage of the Kübler-Ross model (commonly known as the stages of dying), even though it has nothing to do with price negotiations.
Contents
* 1 Contexts where bargaining is allowed * 1.1 Regional differences * 2 Theories * 2.1 Behavioral theory * 2.2 Game theory * 2.3 Bargaining and posted prices in retail markets * 2.4 Processual theory * 2.5 Integrative theory * 2.6 Narrative theory * 2.7 Automated bargaining * 2.8 Anchor Pricing * 3 See also * 4 References * 5 Further reading
Contexts where bargaining is allowed
Not all transactions are open to bargaining. Both religious beliefs and regional custom may determine whether or not the seller is willing to bargain.
Regional differences
In North America and Europe bargaining is restricted to expensive or one-of-a-kind items (automobiles, jewelry, art, real estate, trade sales of businesses) and informal sales settings such as flea markets and garage sales. In other regions of the world bargaining may be the norm even for small commercial transactions.
In Indonesia and elsewhere in Asia where locals haggle for goods and services everywhere from street markets to hotels, haggling is a strong cultural tradition that even children learn from a young age. Participating in that tradition can make foreigners feel accepted.[1] Haggling for food items is strongly discouraged in Southeast Asia and is considered an insult, because food is seen a common necessity that is not to be treated as a tradable good.[2]
In almost all large complex business negotiations, a certain amount of bargaining takes place. One simplified 'western' way to decide when it's time to bargain is to break negotiation into 2 stages: creating value and claiming value. Claiming value is another phrase for bargaining. Many cultures take offence when they perceive the other side as having started bargaining too soon. This offence is usually as a result of their wanting to first create value for longer before they bargain together. The Chinese culture by contrast places a much higher value on taking time to build a business relationship before starting to create value or bargain. Not understanding when to start bargaining has ruined many an otherwise positive business negotiation.[3]
In areas where bargaining at the retail level is common, the option to bargain often depends on the presence of the store's owner. A chain store managed by clerks is more likely to use fixed pricing than an independent store managed by an owner or one of owner's trusted employees.[citation needed]
The store's ambiance may also be used to signal whether or not bargaining is appropriate. For instance, a comfortable and air-conditioned store with posted prices usually do not allow bargaining, but a stall in a bazaar or marketplace may. Supermarkets and other chain
Reference: Wikipedia for all