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Reviewed by Anjaneyulu | Updated on Jun 10, 2021



Haggling is a kind of negotiation in which the purchaser and seller of a good or service decide the price and exact purpose of a deal. If the negotiation creates terms and conditions agreement, the contract may take place.

Bargaining is an alternative price-fixing tactic. Optimally, they can deduce the buyer's willingness to spend if it costs the seller nothing to participate and encourage bargaining.

This allows more market surplus to be purchased as it enables price discrimination, a mechanism whereby a seller may charge a higher price to one more willing buyer (by becoming richer or more desperate).

Understanding Haggling

A certain amount of negotiating takes place in almost all large, complicated business negotiations. One simplistic 'western' way of determining when to negotiate is to break down the agreements into two stages: value formation and value claims. Claiming interest is just another bargaining term. If they view the other side as having begun to negotiate too early, several societies take offence.

Typically, this offence is because they want to build interest for longer before they work together. By comparison, the Chinese culture places a much greater emphasis on taking time to establish a business partnership before beginning to create interest or negotiate.

Haggling has vanished mainly in areas of the world where the cost to haggle for most popular retail products exceeds the value to retailers. Nevertheless, bargaining may remain commonplace for costly goods offered to uninformed purchasers, such as automobiles.

Haggling in Retail Markets

Retailers may opt to sell at advertised prices or permit bargaining which is selling at a publicly posted price commits the retailer not to manipulate consumers once they reach the retail store, making the store more appealing to potential customers.

In contrast, a negotiating strategy has the benefit that it enables the retailer to differentiate between various consumer types. Prices continue to increase when the proportion of haggling customers is increasing.

Behavioral Theory

The theory of personality in negotiation stresses that the personalities influence the process of negotiation and its outcome. A common theory of behaviour is about distinguishing between hard-liners and soft-liners.

Specific research papers refer to extremists as hard-liners, while shopkeepers are soft-liners. However, it varies across regions. In rural and semi-urban areas, bargaining will take place more than in a metro city.

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