Here's another great post from our friends at Business Insider:
Princeton's John Nash earned the Nobel prize in economics for his work in game theory, a method of strategic thinking. Nash was portrayed by Russell Crowe in the 2001 movie "A Beautiful Mind."
Fortunately, you don't need a Ph.D in economics to apply basic game theory in everyday life.
@chessNwine tweeted this video featuring 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 5:00 p.m. 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 If you do not quote a price for me, I understand that you are telling me that you know you don't have the best price, and I appreciate you saving my time."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.
Bruce says that he has bought 11 cars using this strategy, and that a student of his and an Irish Times reporter have used this strategy, which resulted in saving thousands on their car purchase.
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