China's younger generation losing interest in bargaining

As a matter of course, bargaining is out, in an increasingly affluent society.

In this sense, bargaining is a product of poverty. But its relationship with income is not absolute.

In many countries, where residents' incomes are much lower than in China, bargaining is not popular at all.

I can still remember my failed bargaining attempts in Africa and Indonesia, where vendors looked at me as if they saw an extraterrestrial when I sought something at half the price. They shook their heads and halted the negotiation.

Later I was told by friends who had been staying there for years that bargaining was not part of local commercial culture. Sellers like to give discounts only if one buys in bulk.

This experience shows that bargaining can be caused by something else.

The theory of information asymmetry, which deals with the study of decisions in transactions where one party has more or better information than the other, can well explain this.

In China's case, sellers often have more and better information than buyers, prompting buyers to haggle for lower prices amid great mistrust toward sellers.

This was particularly true during the years when the planned economy changed into the market economy.

In the late 1970s and the entire 1980s, when a dual-track pricing system was implemented, there were at least two major types of prices for the same product.

One was set by the government as a legacy of the planned economy while the other was determined by the market. The latter was usually higher.

This dual track, together with high transport costs and limited production capacity, led to the scenario in which a product could be priced very differently among regions and even among different types of sellers, for example State-owned retailers and private sellers.