I decided to visit the Paly High Flea Market today with some of my friends, both to find cool things and to support local community. The Flea Market brings together people from all walks of life, from crafty salesmen to an old couple wanting to sell off some of their old treasures. It is also a big fundraiser for Palo Alto High School’s music programs, something I really enjoy supporting.
In lieu of an Econ in the News segment this week, I think I’d like to highlight some important lessons you can learn when in the midst of a flea market:
- Know your highest offer beforehand, and be prepared to walk away: One of the friends I brought with me on this excursion ended up buying a lot of really cool items, including a working typewriter and an old, rusty sickle. When he went to buy another item, I realized that my friend was susceptible to first-degree price discrimination. In other words, merchants would offer him a price and he wouldn’t try to bargain at all, nor did he set a limit on how much he’d be willing to pay for an item. When trying to buy another thing for his eclectic collection of the day, I got him to verbally commit to me the highest price he valued the item; when the seller refused to part with the item for anything less than 150% of that highest valuation he had set with me, my friend walked away, his wallet all the better for that decision.
- Use Asymmetric Information to your advantage: Asymmetric Information sounds just like what it means: you know certain details about an item in question, and the seller knows some stuff about the item they are selling. If you know the item on the table is genuine and goes for $80 on Ebay, but the seller wants $5, then you’re getting a really good deal and the seller gets some much-appreciated cash.
- Be prepared to Haggle: Haggling, or bargaining for the best price with the seller, is one of my favorite things about the flea market. This combines both first-degree price discrimination and asymmetric information; when haggling, you use your knowledge about the item and the seller to try to get the lowest price you can, while the seller does the opposite to maximize profits. In the end, most successful haggling transactions result in 20-30% off the original price. Keep in mind that any and all information you can glean will be useful. As an example, chatting with the seller beforehand builds empathy and gives you additional insights into how business is going, which can affect how deep a discount you go for (as well as find out cool things about life from new people).
This flea market encompassed everything from knockoff purses and sunglasses huts to Civil War gear, old movie memorabilia, multicolored rugs, assorted weapons, and objects that really struck my interest, such as the triangular pyramid filled with beach sand and shells that I bought today. With the three principles above, I quickly negotiated a 25% discount with the seller and walked away with a beautiful dorm decoration.