It’s 2018 now. Let’s go back in time to witness an important event in history.
In the year 1994, John Forbes Nash Jr, An American mathematician who made fundamental contributions to game theory with his “Nash Equilibrium” won a Nobel Memorial Prize. Now, What is Nash Equilibrium and how is it relevant here?
To Quote him in simple words, “When Nash equilibrium is reached, players cannot improve their payoff by independently changing their strategy.” I have always found this intriguing and I kinda see how it plays an important role in any place with high market activity.
Now hear me out, any place with lot of market and economic activities highly involves game theory and nash equilibrium. The mere act of buying and selling is the game and we, the people are the players. Anybody would obviously choose to win than lose and hence, sellers, use tactics to attract buyers to increase profit and the buyers, looks for ways to reduce that profit and hence bargain.
But, we see these places packed with more than one shop which sell the same thing so close to one another. That is when we could say markets like these have already attained Nash Equilibrium so whatever say,one jeweller does to maximise his profit, he can’t increase his payoff from the second jeweller as there would be customers visiting the second guy equally.
That being said, setting aside these big shops or multiplexes, we also see a lot of street vendors. I feel like they play a very important role in setting the economy of a place. You see,
A mall or a supermarket is always Capitalist, whereas, A street vendor or a hawker is always consumerist meaning, a consumer doesn’t have a say in what a supermarket sells but decides what a street vendor sells. A street vendor sees demand through a buyer’s mind. A vendor selling cold juice on summer might be selling sweaters in winter.
But why do people only bargain with vendors and not in malls? The most simple reason is people do not see anybody bargaining in the malls. They very well know that the profits made in malls are a lot higher than what a street vendor makes. People always expect backing, some kind of assistance, a moral support to bargain which is not present in malls and hence, to show themselves as wealthy, they do not bargain.
The point here is of course, not to start bargaining in malls, but, to stop bargaining with these vendors. So, the next time, when you bargain, remember to ask yourself the question,
“Do I bargain in malls?”