The profession of car sales is among the least trusted in the United States. Some people put off replacing their cars for years because they dread setting foot in a dealership. If customers are dissuaded by aggressive salespeople, why do aggressive sellers persist? For insight, remember the prisoner’s dilemma story about dominant strategies leading to lose-lose situations.
In the context of car sales, consider a dealership with two sales people, each of whom must choose to be pushy or not. Suppose that if both salespeople are pushy, that will scare some people away and they will sell 4 cars per day—2 per salesperson. If neither salesperson is pushy that will encourage shoppers to visit often and linger longer, leading to sales of 10 cars a day—5 per salesperson. And if one seller is pushy and the other is not, 7 sales are made and the pushy salesperson elbows out the non-pushy one and sells 6 of the 7 cars.
How does each seller see the options? If the other seller is not pushy, a pushy strategy sells 6 cars and a non-pushy strategy sells 5 cars; if the other seller is pushy, a pushy strategy sells 2 cars and a non-pushy strategy sells 1 car. So, given either strategy from the other seller, each seller sells more cars by being pushy . The outcome of this dominant strategy of pushiness is that each salesperson sells 2 cars. Sadly, despite the reasoning behind the pushiness, this outcome is worse for everyone involved than if no one were pushy! A pair of non-pushy salespeople would sell 5 cars apiece, and give each customer a less stressful buying experience. That would be a win-win-win, but it’s unlikely to happen.