Bargaining in Night Markets
In Asia, night markets are one of the most popular tourist attractions. From fridge magnets to fake Louis Vuitton bags, the night market sells goods at low prices. The sellers also allow you to bargain if you feel that the price is unreasonably high. When you walk into a night market, you go through dozens of different vendors. Once you pass the first few, you will start to notice some patterns. They all sell similar – if not the same – sunglasses, handbags, and wallets. Also, when you ask the sellers how much the goods are, they always start off at unreasonably high prices. The quality of the goods sold at the night markets are not that high. Thus, most of the customers attempt to bargain. The customers have bargaining power because they have plenty of options to choose from. If they first vendor will not sell the item for the price you want, you can always go to the next one and bargain for the exact same item.
The relationship between buyers and seller at night markets can be represented by a graph. The nodes represent the sellers and the buyers, and the edges represent the possible exchanges that could occur between a buyer and a seller. There would be several edges going from one customer to multiple sellers. This puts the customer at a powerful position since he or she is not dependent on one seller. The seller also cannot isolate a specific buyer since the buyer has other options. Although the customers are at a powerful position, this does not mean that they will purchase the items at extremely low prices. The sellers at the vendors often ask the customers how much they would like to buy the item for. If the customers ask for an extremely low price – suppose 10% of the price that the seller suggests – then the seller will most likely tell the customer to go to a different place. This is similar to the Ultimatum Game. The seller will not accept extremely low prices. Especially if the customers approach the bargaining in an aggressive manner, the sellers experience negative emotional payoffs. It is interesting to observe and analyze the bargaining and power distribution among buyers and sellers at night markets.