Applying Game Theory  
by Victor

Game theory is essentially strategic decision making. Psychologists call game theory, the theory of social situations. The question becomes, how can one integrate this concept to their daily life? One area where game theory is applicable is buying a car. Buying a car requires negotiations and strategy for one to receive the best outcome.

Let’s take a look at how you might buy a car through game theory.  

1.   Decide what car you want to buy and all the options. 

2.   Call all the dealerships in the nearby area that hold the car you’re interested in and tell them the same statement. “Hi, I plan on buying a car today at 4pm. I’m going to buy the car from the dealer that gives me the best price. What is your best price?” 

3.   The dealers may be hesitant to quote a price. If they don’t quote a price or try to redirect you, say something along the lines of “If you don’t quote a price, I’ll know you don’t have the best price and I appreciate you saving my time.”

4.   The dealers can say three things. They can say goodbye and hang up. They can quote a price which then allows you to call the next dealership and start from step 2. Or they say that when they tell you a price that you’ll call someone else and they’ll quote a price that will be lower and you’ll go buy their car.

5.   Your response should be, “That’s right! So if you can go lower, this is your opportunity. I will buy from whoever gives me the lowest total price. I will not discuss the lowest price. I will come in with a check made out to whoever gives me the lowest price.”

6.   If they go back on their word, just walk out and go to the next dealer with the lowest price. 

As you can see, through a series of strategic questions, statements and decisions, you’re able to corner the car dealer into a situation where you win. 

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