Haggling is a mechanism for price discrimination: the salesman's goal is to elicit the maximum price the buyer is willing to pay, which sellers can exploit when there is a gap between the buyer's maximum and the seller's minimum; this is why Priceline-style 'name your price' systems can actually disadvantage consumers who reveal their maximum.

causalpending

Speaker

Michael Munger

Evidence Quote

what would help me the most is if you would announce to me the maximum amount that you would pay... I'm going to keep that secret

Source

Michael Munger on Franchising, Vertical Integration, and the Auto Industry 06/22/2009EconTalk
Created: 6/17/2026, 10:31:26 AM

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