Haggle

What is Haggle?

To haggle is a situation when two parties, involved in one transaction, be it a purchase of a service or a product, negotiate the price until both of the parties agree on one price mutually. This process comprises two parties making offers and counteroffers until they get a price to agree upon.

The person buying the product or service tries to pay the least amount, while the seller maximizes the price as much as possible. Haggling, in a way, can also be known as informal negotiating, dickering, quibbling or bargaining.

This act has been existing since ages. Haggling is also quite common at informal flea markets while buying a car or a Real Estate property. However, it is rarely used at branded clothing stores or supermarkets.

Understanding Haggling

Not every other transaction will be opened to haggling. Globally, bargaining has different levels of accepted tolerance. In North America and Europe, haggling is basically accepted for larger ticket items, such as real estate, jewellery, and automobiles.

However, small, daily items, such as a gallon of milk or combs don’t get included in this concept. But in other regions of the world, bargaining for small items is accepted and is also an essential part of the culture.

In some of the regions, even children are taught the art of haggling from a young age to make sure that they get the best deal when buying something. The acceptance of bargaining can also be comprehended by the location.

In grocery and department stores, often haggling is prohibited. However, at places like bazaars, outdoor marketplaces and flea markets, this act is not just accepted but encouraged as well. Several people also consider haggling as a skill or art of persuasion instead of a rational economic activity.

In the past, there have been several economic theories describing the complete process of haggling. Behavioural theory talks about specific people having different dispositions or personalities toward bargaining instead of taking the offered prices.

Also, game theory provides solutions to haggling issues as a vital part of the strategic action, which can be interpreted as a part of acquiring the Nash Equilibrium condition. Not just that, but it is also regarded in the retail pricing theory.

And then, mainstream Economics suppose that all of the Market prices are jointly comprehended by the demand and supply; thus, there would be no need for bargaining as all the prices describe an equilibrium level.