As I wrote about last week, I was at a negotiation conference in Istanbul in which participants were given assignments to negotiate in the Spice Market. Melissa Manwaring, who used to work with the Program on Negotiation and is now a professor at Babson College, came up with the great idea of each person from her group of five going into a shop and asking for the price of the same item to see if there were significant differences. Think of this as the Ayres study on car dealerships done in Turkey over jewelry boxes.
In Ian Ayres’ famous study of car dealerships in Chicago, it appeared that white men got the best (lowest) opening price for their cars, while black women got the worst opening bids. In Melissa’s group, there was a wonderful mix of an older white male American (Howard Gadlin), Melissa herself (white female younger American), a young ethnic Chinese man (Andrew Lee), and two native Turkish speakers, so this was a great gender and ethnic mix to test.
It turns out that this group found exactly the opposite of what Ayres found.
Each person went in to ask about the jewelry box over the course of an hour. The one potential failing of the test which they did not realize until later was that they dealt with different salespeople, so one of the differences could be the salesperson. (This was not controlled for in the Ayres study, either.) Results found by this group for the jewelry box:
Older white male—55 lira
Younger white female—45 lira
Young Asian male—30 lira
Turkish speaking females—25 lira
Although there are potentially many explanations — Melissa tried to ask the seller about this afterwards but to no avail — I have a few. My guesses are based on my own interview with a different seller (our group of three talked for a long time to a different vendor of lights and scarves after one colleague went in to ask about a light and was quoted 150 lira, which our Turkish colleague then purchased for her at 50 lira). Once we finished the purchase, we asked the indulgence of this wonderful guy who talked to us over tea for over an hour about his experiences in the market. He was also an American citizen who had lived in San Francisco for ten years. Based on the conversation with him, the vendors know that Americans don’t like to bargain and will only bargain for a round or two of counteroffers.
So, here is my thinking on Melissa’s experiment. First, the store owner assumed that the older male had more money. Second, the store owner assumed he would not bargain all that much (this would actually be somewhat similar to one of Ayres’ hypotheses on lack of BATNA or ability to bargain.)
Melissa, who went in next, may well have gotten “the nice eyes” discount. As explained by our store owner, he often will give a lower price to a smiling, nice-looking buyer. (Note to self: reapply lipstick before going into bazaars.) Melissa also thought that the seller could have assumed she would have less money to spend. Andrew Lee, the recipient of the 30 lira price, thought that perhaps the seller assumed he had very little money — he was casually dressed and young, and there are not slews of wealthy Asians coming through Istanbul. (According to our store owner, the wealthiest tourists come from the Gulf states.) Finally, as expected, there is the local price – and this similarity factor, more than the discriminatory factors discussed in the Ayres study, seemed to have the most to do with the opening price.
Cross posted at Indisputably.
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