Stories | December 10, 2009

How to haggle a bargain

Start with taxis and move on to the markets

Haggling over a taxi fare in another country can be a tricky business - but an academic has come up with a formula that could help.

The formula takes into account a price premium for being a foreigner in an unfamiliar place - and suggests ways to get the price down.

Start low and keep smiling
Yale political science and economics assistant professor Chris Blattman used his experience negotiating fares for unmetered taxis in Ethiopia's capital city Addis Abeba to create the strategy. He advised in his first step to haggling for a reasonable taxi fare to do research first.
"Figure out the 'real' price beforehand. Shopkeepers, hoteliers, hosts, and the like will help you here," he writes. 
Choosing a low starting point was key. Then Blattman says it is time to work out the "national bargaining fraction" - which indicates the degree to which the negotiations usually move in the country.
"In Ethiopia, it seems to be about 70%. He'll counter with 130% the target, and you get to the price you want in about two rounds. Very civilized." Blattman suggested hagglers did not lose their temper and remember to smile. He said the techniques also worked to strike a bargain in markets.

More taxi tips
Online comments to Blattman's post included one from a "Nelson" claiming negotiated prices for taxis in Beijing were always higher "by a factor of several hundred percent" than metered prices. Meanwhile "Ross" gives this tip: "When you arrive at an airport, go by foot from the Arrivals concourse to the Departures concourse. Collect a (very happy) taxi there and save."
Online calculator World Taximeter gives an estimate of metered fares in more than 20 cities - including New York, London and Amsterdam.

eZonomics team
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