Bargaining for a New Car: The Knowledgeable versus the Naive Consumer

Abstract

A field experiment was conducted on the use of bargaining strategies for a new car. Confederates (3 men, 5 women) behaved as either knowledgeable or naive consumers in obtaining an initial price offer on a new Ford Mustang. In the knowledgeable consumer condition, confederates carried a price guide and asked the salesperson for a price offer on a Mustang with a specific set of options. In the naive consumer condition, the confederates did not carry a price guide and they asked the salesperson to review the available options. Each confederate obtained three price offers in each condition. As predicted, the prices obtained in the knowledgeable consumer condition were significantly lower than in the naive consumer condition.