How to Buy a Car, Using Game Theory

Bruce Bueno de Mesquita

Bruce Bueno de Mesquita is a senior fellow at the Hoover Institution and the Silver Professor of Politics at New York University. He is an expert on international conflict, foreign policy formation, and nation building. His current research focuses on the links between political institutions, economic growth, and political change. He is also investigating the causes and consequences of international conflict as well as national security policy forecasting and analysis.

Using a proprietary mathematical formula that takes into account the self-interests of and alliances among actors in key business and political questions (i.e. whether Iran will build nuclear weapons), de Mesquita predicts the future for businesses and organizations such as the CIA.

His most recent books include The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics (PublicAffairs, 2011) and The Predictioneer's Game: Using the Logic of Brazen Self-Interest to See and Shape the Future (Random House, Inc., 2009)Additionally, he has authored more than one hundred articles and fourteen books on politics, as well as one published novel, The Trial of Ebenezer Scrooge (Ohio State University Press, 2001).

05 January, 2012

So let me lay out how to buy a car.  It’s very easy.  Decide exactly what car you want to buy, make, color if it matters to you, options and so forth.  Then do not go to a dealership.  Let your fingers do the walking.  Telephone all of the dealers who sell the vehicle you’re interested in who are, say, within a 50 mile radius, a 25 mile radius, 75, however far you’re willing to go.  To each of them make the same statement:  “Hi, my name is so and so.  I plan to buy such and such a car today at 5pm.  I’m going to buy it from the dealer who gives me the best price.  What is your best price?”  The dealer may say—the person on the phone may say: “Well sir or madam you can’t buy a car on the telephone.  Come in.  We’ll give you the best price.”  The response to that is:  “I know I can buy a car this way because I know many cars have been purchased this way, so if you don’t quote a price to me I understand that you’re telling me you know you don’t have the best price.  I appreciate you’re saving my time.”  Now they will either say thank you good bye or they will quote a price or they will say yes, but when I tell you a price you’ll call the next dealer and that person will quote a price that is $50 lower than mine and then you’ll go buy their car to which the response is:  “That’s right, so if you can go $50 lower this is your opportunity because I will buy from whoever gives me the lowest price and I need the full total price, taxes, everything.  I don’t want you to charge me $450 dealer prep to wash the car.  I want a full end price.  I will not discuss the price when I come in.  I will come in with a check made out to whoever gave me the lowest price.  If they renege I will walk out.  I will have the second best price check in my pocket.  I will go buy it from them.  What is your best price?”  

I have now bought 10 or 11 cars this way.  I just got an email from a Marine officer who teaches an intelligence course.  One of his students, another Marine read The Predictioneer’s Game, went out, bought a book, had written down what his dream price was for the car.  He beat the dream price by $2,000.  I just bought a car for about $6,000 less than one would have expected.  I have a student who just bought a car for several thousand dollars below invoice.  An Irish Times reporter bought a used car this way.  He said this can’t work, it’s ridiculous.  He telephoned.  He wrote an article.  He said in ten minutes I bought a car for two and a half thousand Euros less than the highest price I was quoted, which was what I expected to pay.  It actually works.  So there is a good example of a simple problem just a little bit of logic.  All the information flows from the dealers to you.  You never ask the question what will it take to get me in this car today other than to say you’re having the lowest price.
 
Directed / Produced by
Jonathan Fowler & Elizabeth Rodd 

 

Bruce Bueno de Mesquita, author of The Predictioneer's Game, shares his foolproof method for getting your next car for the lowest price possible.

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