i. Harlem
Weave past 125th street over to Adam Clayton Powell Blvd in Harlem, New York, and if you have black hair, a symphony of voices might accompany you:
“Hair braiding, Miss, hair braiding?”
Senegalese women grouped in doorways, their own hair often under a scarf or hijab, advertise hair braiding services. Walk into any one of those storefronts-cum-salons—often nestled between the standard New York cacophony of bodegas, Chinese restaurants and the halting ex-nightclub undergoing its fifth reincarnation as a med-spa catering to Harlem’s new elite—and you’ll be greeted by six to ten hairdressers in a large room.
Each hairdresser has her own chair, each chair is apportioned its own mirror and dresser on which posters advertising hairstyles (generally titled 2023 HAIRSTYLE CALL 080 55 99) are displayed, and underneath, a business card for whichever enterprising woman owns the chair. In the corner is usually a madam who actually owns the salon, identifiable by the frequency with which the other ladies walk up to her to exchange $100s for $20s and $20s for $1s.
If you look up, you’ll see the last television set from 1993, Burna boy’s latest hit streaming on mute, while jovial French flies across the room, hairdressers teasing, gossiping, exchanging business tips with each other, while others speak loudly into Bluetooth earphones, roll out plastic prayer rugs, or buy fruit, scarves, small kettles from travelling vendors who stop by to hawk their wares inside the store. All this as their hands fly furiously, unceasingly braiding, twisting, sewing, wrapping, combing, gelling, crocheting, spraying hair with practiced expertise.
Amidst this controlled chaos, a halting comedic scene plays out whenever I get my hair done. After an incredible number of hours--during which I’ve read a book, had a meal, and made eye contact with my hairdresser in the mirror, hands furtively touching my hair to see how much hair is undone and left to be braided (any experienced hair-braidee will tell you never to be fooled by the amount of hair left. What looks like a “small” amount will find you there 2 hours later as the undone portion shrinks at the speed of snail). My hair is finally done, it looks great. And then the telenovela starts. I turn to my hairdresser:
“It looks great, how much do I owe you?”
“How much do you want to pay?” She shrugs, smiles demurely, folds her arms.
Cue chuckles, silence and the battle of wills.
ii. Anchoring
I’ve been going to Senegalese hair braiders in Harlem for the better part of two decades. I’ve been going to the same hairdresser for more than a decade, in between moves across multiple countries and cities in the US. Every time I’m in New York, I faithfully schedule an appointment to get my hair done with her. I went to her good friend for a decade prior, before she moved to Texas and referred me to my current hairdresser. And yet, every time at the end of getting my hair done, we start the negotiation with a casual refusal on her part to provide me with a price.
Now, this sly negotiation pattern is not endemic to my hairdresser alone. On the rare occasion that I have to visit a different hairdresser, the same scenario unfolds. After spending anywhere from 5 to 8 hours in a chair getting my hair done, the service provider, and expert, asks me how much I would like to pay for the service rendered. I can’t think of another domain where prices are determined in this way.
Yet, as a behavioral economist I recognize the strategy at play – anchoring and adjustment. Anchoring is a cognitive bias in decision-making wherein individuals rely heavily on the first piece of information they encounter (the "anchor") when making subsequent judgments. This initial information sets a reference point, influencing how people perceive and interpret new information, and can skew their estimates or decisions. And so if my hairdresser knows that her braids are worth $100, she prefers for me to make the first move because I might offer $140 or $180. The first offer is the anchor and sets the stage for the negotiation. These negotiations are naturally carried out in whispers or conducted outside the salon because other clients must not hear what she and I have landed on as a price – another client might be willing to pay $220 for the same braids.
As a credentialed behavioral economist with almost a decade of experience in the finance world, I gather my wits and attempt to insist on my hairdresser providing a price first.
“No, you’re the expert, I don’t want to insult you, Aunty, so you tell me how much.”
“No nah, you tell me.”
I laugh. She laughs. I stare at her, she smiles back. But neither of us offers a price. We’ve made these moves dozens of times. I try again.
“Aunty, you’re the one who knows what the price is, I can’t guess.”
“Hmmmn hmmmn,” Shaking her head.
“Oya, tell me” (The Nigerian in me assumes every African understands Nigerian slang.)
“No, you tell me,”
Cue another few minutes of us staring each other and smiling, unbudging. A casual battle of wills.
Anchors are all around us, from ‘suggested donation amounts’ provided by nonprofits, to tipping screens that coyly set one-click options starting from 30% down to 22%, ensuring that most people will choose a middle option – a much higher percentage than the 15% norm.
iii. Adjustment
Once an anchor is set, our prefrontal cortex is involved in adjusting estimates away from the anchor to reach a final judgment. In instances of uncertainty – when we are novices or beginners or have never had the pleasure of staring stupefied at a hairdresser who refuses to give you a price for the last five hours of work she’s just invested into your Senegalese twists–we may resort to heuristics, like the availability heuristic – how much did my cousin tell me she paid the last time she got her hair done. Does $200 sound reasonable? $170?
And when an anchor is set, we often remain closer to the anchor than is warranted. I recently had a conversation with a friend sizing up a lending opportunity. A borrower was asking for $300,000 to buy and repair a house with the promise that after $20,000 worth of repairs and upgrades, it would be worth $450,000. A casual glance at comps suggested to me that $450,000 was a stretch in an area where other homes were selling at $300,000. Yet, as my friend and I discussed the loan, we found ourselves trying to see if any other homes had sold in the $450,000 range in that neighborhood. Eventually, we realized we were falling for the anchor the borrower had set and went back to first principles on evaluating the property.
Yet, when staring at a tip screen in a taxi or at a coffee shop, it’s much easier to fall prey to anchors, partly because of the time pressure and cognitive load involved in trying to estimate what something is really worth. At the end of the day, a 22% tip on a coffee is not the end of the world, and will not have the same financial impact as falling for a high anchor on a hundred-thousand-dollar deal.
iv. Harlem, again
Value is contextual, and anchors can often set that context. Indeed, this tactic of allowing the other party set an opening bid has worked excellently for me in higher-stakes negotiations. I’ve had opening bids that were an order of magnitude higher than what I was planning on asking for. And when the reverse happens – when the opening bid is inadequate, I provide my own range, and ask what’s possible within that range. Or ask for concessions equal to or above what I’d like.
In a decade of hair braiding, I don’t remember ever haggling over prices, instead this elegant dance is performed. Me, a customer acutely aware of the effort involved in doing hair, with a desire to maintain a long-term relationship with an excellent hairdresser (an excellent hairdresser should at some point find herself serving multiple members of the same family) and of the implied respect in allowing me to set the tone of the negotiations, find myself making the first move.
Always, inevitably, I pull out my phone, head to the calculator app, type out a furtive number. And then show it to her. My hairdresser takes the number, ponders it for a minute, and then says, “OK.”
We laugh, I shake my head, add a tip to that amount, and reach into my bag and pay in cash – having stopped by an ATM earlier and taken out the exact amount I expected to pay for my hair—negotiation tactics go both ways.
References
Chapman, G. B., & Johnson, E. J. (1999). Anchoring, Activation, and the Construction of Values.
Epley, N., & Gilovich, T. (2006). The Anchoring-and-Adjustment Heuristic: Why the Adjustments Are Insufficient. Psychological Science, 17(4), 311-318.
Furnham, A., & Boo, H. C. (2011). A Literature Review of the Anchoring Effect. The Journal of Socio-Economics, 40(1), 35-42.
Mussweiler, T., & Strack, F. (1999). Comparing is Believing: A Selective Accessibility Model of Judgmental Anchoring. Journal of Personality and Social Psychology, 76(2), 149-158.
Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124-1131.
More on the fascinating world of Senegalese hairdressers: https://www.okayafrica.com/african-hair-braiders-harlem/