Home > Behavioural Economics, Market Structures > How to buy a car using “Game Theory”

How to buy a car using “Game Theory”

Just covering market structures at present with my A2 class and came across this video clip on the Business Insider website.

Bruce Bueno de Mesquita, a political scientist and professor at NYU, who explains how to purchase a car using game theory.

He says that you should first establish a radius for however far you are willing to go to purchase the car. You then call a car dealer and make this statement. “My name is (your name here), I plan to buy (whatever car it is) at 5:00pm. I am going to buy it from the dealer who gives me the best price. What is your best price.”

The dealer will commonly respond with “You can’t buy a car on the telephone.”

Bruce then elaborates that the response to this is “I know I can buy a car this way, because I know that many cars have been purchased this way. If you do not quote a price for me, I understand that you are telling me that you know you don’t have the best price, I appreciate you saving my time.”

Bruce then says that the dealer will worry that you are just going to take his price and use it in negotiations with another dealer, essentially using him to lower your price.

You then explain that you will buy from whoever gives you the lowest price. You will not discuss the price when you get there and you will show up to the dealership with the check in your hand. If the dealer reneges, you will move on to the second best price as you have that check in your pocket as well. You then end by asking for the dealer’s best price.

It may sound silly, but apparently it actually works.

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  1. May 11, 2012 at 3:57 pm

    Sounds really interesting as I was not aware of the Game theory of buying a new car. I looks like, it would definitively help you end up buying the best car at the best possible price.

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