Tuesday, March 29, 2011

Why is it easier to bargain for taxi fare for Vasco?

You want to go to Vasco to get a datacard recharge, because the online payment method on your provider's website is "temporarily out of service". A friend gives you a cab guy's number, which you call.

"Bhaiyya, BITS se bol raha hoon, Vasco jaana hai"
"Kitne baje jayenge bhaiyya?"
"Abhi nikalna hai, 10 minutes me CH1 aa jao"
"250 lagenge bhaiyya"

250 bucks? are you kidding me?

You remember the good old times, when everything was cheaper and Goa didn't have the perception that BITSians are filthy rich brats with Goa more on their mind than academics, and deserved to get ripped off (It's still not true, by the way. about 25% of the batch avails merit-cum-need scholarships given only to students with good marks and parental income less than Indian Rupee ₹ 3,00,000 per annum, which, according to my guess, is less than what cabdrivers make in Goa)

But no matter what the situation presently is, you still have to go to Vasco today. You have a term paper to submit next week, and can't rely on campus net to be available and all sites you need unblocked. you ask the guy if he'll take 200 instead.

"Nahi bhaiyya, 250 hi lagega"

You have Greg Mankiw's Principles of Economics open at your desk. you idly glance at the page open - it says "Principle 7 - Rational individuals think at the margin". You think about the paper you have to finish, and meekly commit to paying 250 rupees on the phone.

What could you have done differently?

The main gate has a pseudo-taxi stand. Taxicabs arrive in the morning, waiting for business which may or may not turn up. These cabs generally are from the Vasco Taxi-stand. Business is not guaranteed because

a) It's not a city/town centre, so people may or may not be in need of a commute at all times.
b) There are no rules on who gets the next traveller, and no consent-based fixed price as almost all taxi stands have.

Say the guy you call is stationed at the Vasco taxi stand. He has to come from Vasco for you, wait for you, take you to Vasco, and go back to the taxi stand. In the time it took from his leaving and getting back to the stand, he has to forego any business which comes at the stand. In addition, he has to go back to the end of the queue after he comes back as is generally the norm. All this, consciously for you.

Compare this to the guy at the gate. He has already made the trip to the main gate, and not specifically for you. If he chooses to take you to Vasco, he can get back to the taxi stand with no extra travel required. There are plenty of other taxis with him at the gate, and no queuing rule implies they all can compete for you.

Rational individuals think at the margin.

Next time you have to go out, go to the gate and sign out. Then start your negotiations to get to Vasco at a price slightly less than what you think is reasonable (say 150-20=130). Remind the guy you have so many options to choose from (If you can, talk to another cab guy noncommittally in his sight. A picture is worth a thousand words.) Remind him of the fact that there's no surety that business will turn up in the next one hour, and by standing there not budging, he's missing out on the business that he would've got in Vasco. Say you thought he would know what a good deal is, but you were wrong.

The taxi guy will start with quoting a lower price. You have 20 rupees as your reserve quota, use it in two 10 rupee slots.

"220 me le chalta hoon bhaiyya"

Knowledge is Power Supreme. Who would've thought?