Malcolm Gladwell has been having a ongoing blog meme about the Ayres study discussed in Blink. A study in which it was tested whether race effected the price people of the same age and similar story ( job, house location, car, cloths) were offered by car salesmen.
The debated is raging over the “racism”, or whether it is an initial retail decision by the salesmen. There are a lot of points that can be made. In Malcolm’s last post on the subject, he points that people (responders to his post, and the salesmen) seem to discard the other factors, and are focusing on race, therefore there is some form of racial-prejudice.
This post is missing any evidence that the car salesmen discarded the data. The only variable in the experiment was race, and the experiment demonstrates that race has an effect — but you’d need to do another experiment (keep race constant and vary age, for example) before you can argue that the car salesmen were only focusing on race.
I was thinking about this topic on the way to work. My take on the study was, the price difference was the opening price. From this you could take the that black males are being getting a bad deal. The counter arguments are – well is that not the car salesman job, to get the best deal, and if the strategy doesn’t work, then surly the market would punish those dealers. Malcolm make this point is his book, because 99% dealers said treated everybody the same. Thus focusing on the first two point below*. But did the say what Malcolm wanted to hear. This is the base of some of the debate. Without studies to provide none biased sales give better performance, we can’t know if it’s other factors that made the 99% sale guys better.
As Malcolm, notes cars sales happening infrequently (per person), so the information imbalance is large. So the more interesting question is why to car salesmen get away with price differences. There are many possibilities, and I believe it primarily comes down to information imbalance. When I buy stuff, I’m paranoid I’m paying more than I could/should, but there is also a balance of how much effort are you willing to spend to address the imbalance. Also how much time do you have to make the purchase, thus can play the “not interested” game, to lower the price.
Myself I know I hate any price where it is not pre-stated. I prefer to look at a price, and compare it to my want/desire and do all my humming and haring in private, then when I decide I wait the item, to just buy it. Thus with things where you haggle, or negotiate like the house we brought, you have to expose your interest, and it becomes a game where your playing against a professional (the trader or the sale agent) and the information imbalance always makes me feel I way have come away worse than possible. It becomes a nagging thought, so I just avoid negation.
Conversely, I’m not good at poker, because I know I’m terrible at masking my feelings/thoughts. But I do see why I should have too. I don’t want to live in a world where that is required. Therefore am I willing to pay the “normal” price and be content, sure am.
So back to back to the Malcolm debate, could it be possible the different ethnic groups have different valuations on time, money, bartering. Thus sales people can stereotype and get away with it, they are the information professional. *There job is to make you feel reassured about the sale, make you feel special, and close the deal. The first two I think are more important than the third, as the should lead to more of the third via word of mouth.
The major thought coming away from this and the current book I’m reading (The Wisdom of Crowds) is that there are lots of interesting things happening in the world, and I’m not sure I’m in the correct career, as these other area’s seem just fascinating. But then there is a lot of fascinating things happening in software, and I just love making the computer do as I want, and watching the complexity unfold.