“But bargaining is unlike the Ultimatum Game for several reasons. First, neither player is the designated “offer-maker”; either player may begin by making an offer. Second, the game doesn’t end after one round; if the dealer rejects my offer, she can make a counter-offer of her own. Third, and maybe most important, neither player is exactly sure about the size of the pot: I don’t walk in knowing that the dealer bought the table for $50, and I may not really be sure I value the table at $400.”
like dspeyer said, this situation is extremely rare now. Businesses set prices which can remain fixed for months disregarding promotional sales, and customers BATNA without even trying to make a counter offer until they find a shop with a better price- or else just give up on buying the table. This seems like it is mostly only viable and necessary in a modern economy which has reached the scale you get in today’s cities (though once the cities start doing it the major stores apply the same policy to any smaller towns where they have branches so it tends to propagate beyond where it makes the most sense). More customers means several businesses can afford to operate within reasonable travelling distance selling the same product for their own prices, and with each business being larger the person you buy a product at a store from is almost never the majority shareholder or entitled to negotiate in any way. Unless you want to let the proles you hire for minimum wage sell your products for whatever they feel is fair, the only other option is to try and guess exactly how much your customers will value a table in the future, and hope that you do this better than the competition so you can actually make a profit. Businesses almost all play chicken without a steering wheel with the customers, losing money when a customer would gladly pay more, and turning down customers who give them an offer which would still let them make a profit. The post is still good, but it applies to something which I have never even tried in a commercial setting, only when negotiating a deal with a friend or relative.
That is correct, but I was going to explain why I thought the marketplace had taken over bargaining / auctions to see if anyone disagreed or had better ideas.
“But bargaining is unlike the Ultimatum Game for several reasons. First, neither player is the designated “offer-maker”; either player may begin by making an offer. Second, the game doesn’t end after one round; if the dealer rejects my offer, she can make a counter-offer of her own. Third, and maybe most important, neither player is exactly sure about the size of the pot: I don’t walk in knowing that the dealer bought the table for $50, and I may not really be sure I value the table at $400.”
like dspeyer said, this situation is extremely rare now. Businesses set prices which can remain fixed for months disregarding promotional sales, and customers BATNA without even trying to make a counter offer until they find a shop with a better price- or else just give up on buying the table. This seems like it is mostly only viable and necessary in a modern economy which has reached the scale you get in today’s cities (though once the cities start doing it the major stores apply the same policy to any smaller towns where they have branches so it tends to propagate beyond where it makes the most sense). More customers means several businesses can afford to operate within reasonable travelling distance selling the same product for their own prices, and with each business being larger the person you buy a product at a store from is almost never the majority shareholder or entitled to negotiate in any way. Unless you want to let the proles you hire for minimum wage sell your products for whatever they feel is fair, the only other option is to try and guess exactly how much your customers will value a table in the future, and hope that you do this better than the competition so you can actually make a profit. Businesses almost all play chicken without a steering wheel with the customers, losing money when a customer would gladly pay more, and turning down customers who give them an offer which would still let them make a profit. The post is still good, but it applies to something which I have never even tried in a commercial setting, only when negotiating a deal with a friend or relative.
Isn’t this precisely the marketplace situation that was explicitly omitted?
That is correct, but I was going to explain why I thought the marketplace had taken over bargaining / auctions to see if anyone disagreed or had better ideas.