Robot market and the perfect price

I remember from economics class how firms try to navigate pricing. On one side of the spectrum, if you negotiation with each and every customer, you will be able to get the perfect price for each customer. But this takes too long plus it all depends on the skill of the negotiator. So companies decide to set a standard price. This way companies don't have to train every sales rep in negotiation, plus they can conduct business quickly.
Imagine at the grocery store

Clerk: "One can of beans, four dollars."
You:"Four dollars, this is absurd. I will give you a quarter"
Clerk: "A quarter, no sir. That will not even cover the cost of the can those beans are in. A dollar, this is my best price"
You: "Ok a dollar."
Clerk: Scans beans and sends them down to the bags. Picks up other can of beans. "One can of beans, 5 dollars."
You: "Five dollars, you just sold me the identical one for a dollar"
Clerk: "Everyone knows you need two cans of beans to make anything."

This situation is absurd in a western style supermarket. Supermarkets make up for their lack of negotiating a perfect price for each item by volume.

But what if supermarkets could train a robot. A robot that is an expert negotiator and has an unlimited amount of time. Time and negotiation skills are the only two things that are keeping supermarkets from getting the perfect price.

I found the robot. And it is inside the ticket pricing of airline ticket sales.

As I was booking my flight to Portland. I stepped away from the computer to eat dinner. When I came back, the ticket price increased $100 dollars. I couldn't believe it. I saw red glowing letters in the lower corner, 2 seats left. I remembered this feeling from the markets of India. If you come back to a vendor, he knows you are desperate and can jack the price. But,how could the airlines know it was me coming back?
I logged out, then searched without logging in, to see if I could mask my identity. The price had jumped by another 50 dollars. This was getting ridiculous. I was feeling jerked around. I logged in via a virtual connection, so there was no way the airlines could trace my computer. The price was holding steady at 150 dollars above what I initially thought I was going to pay. I pulled up Amtrak and realized that their prices are a joke. I pulled up a driving map to Portland and realized I couldn't make it in time. I decided to sleep on it. The next morning I searched again and the price dropped back down to the original level I was set on.

I don't know what sort of robot I was negotiating with, but I dealt with it the same way I did the in markets of India. I just kept asking for the same price over and over again, refusing the answer I didn't want to hear.

Intercultural Tip: Specific cultural skills are not always culturally bound. Find ways to apply skills learned abroad in the new context back home.

Intercultural Adventure India Part Three

Intercultural Adventure India Part Two

Intercultural Adventure in India

Truth in conversation

While taking a bus home from the University of Minnesota the other day I sat next to a young man from France. I remember beginning the typical intellectual conversation that rides home on the dedicated university bus usually provide. However, something was different this time. I noticed my conversation partner drawing me into a debate. I initially tried to find points of agreement, but then I was quickly served with a "but" or "however". I soon realized the nature of interaction would be a polite debate. For the uninitiated, a polite debate is one typical of a cafe in Paris or a coffee shop in Vienna. The conversations are philosophical and challenging. I relished this chance and enjoyed debating the role of the West for the next seven minutes.

Many French people I have met seem to have a more nuanced handle on the art of conversation. I find myself debating more, making connections between various concepts more, and discussing things for their own sake more often with people from France. Perhaps it is due to the salon culture, perhaps it is due to the extended vacations or longer lunches. Something in the French culture places value on conversation, ideas, and the "the world of forms" as Plato would call it. An American may respond to this form of conversation by saying, "Less talk, more action."

In The Geography of Thought Nisbett argues that the West's conversational culture is rooted in Mediterranean and especially Greek geography. Because Greece was a mixing pot of various cultures that developed on the surrounding islands and across the navigable Mediterranean sea, the culture needed to develop a way to explore an acceptable truth across cultures. They did this by separating ideas from identities. This way people from two cultures could disagree with each others ideas, but not resent each others identities.

The result of this geography is still experienced today in my conversation with the gentleman from France. As one who enjoys debate, but who is also sensitive to face saving, I am glad the West developed a way to separate ideas from identities.

Intercultural Tip: If you think you are just chatting, keep in mind that the function of conversation is different in different cultures.

How to make failure cheap or How you know a bad deal

While working with entrepreneurs, I notice they develop an ability to make failure cheap. This idea is fleshed out by Scott Anthony a bit. Essentially it is ability to design a system so that if and when failure occurs it does not cost very much.
I naturally apply this method when traveling. When I went to India, it had been nearly a year since I had experience negotiating cross culturally. My negotiation skills were fairly weak and knew I needed to get the bad deals out of the way in a hurry. So I sought out some inexpensive items to being with and negotiate away.
The first deal was for these furry slippers that would be perfect for my dad. I casually look at them then begin to negotiate. I hit all the points of the deal.
1. Interjecting deal talk with relationship talk. I learned the young man was from Kashmir.
2. Grouping items, so that you have multiple elements within the negotiation. I added another pair of slippers and a hat. I would add volume and drop price, then drop volume and and keep price.
3. Force the deal. I put the money I was willing to pay in his hand.

Once I finished the deal and the Kashmiri guy accepted the money. He started packing my items in a nice bag. This was a bad sign. If you strike a really good deal, the vendor will just take your money and let you walk away with the items without a bag. By his courteous bagging of my items, I figured I payed about 15% too much.
After the slippers were bagged, the guy told me that if I was ever around I should enjoy tea with him. This was a further indicated that I paid too much. He was really happy with the outcome of the deal. After this invitation, I suspect I paid about 20% over what more savvy bargainers pay.
Then he said something I will never forget, "you are my friend. No, my brother. You are my brother." He probably said this because he will use what I paid for a down payment on his dowry. I must have really gotten taken.

It turns out that I had forgotten to walk away at least twice. I had also forgotten to bargain in earlier in the day, as I have more time to shop around. I was rusty. I am glad I got this deal out of way for inexpensive slippers.