Category: In the prior three posts of this mini-series, I recounted a highly stylized version of an event that happened to Jig, Pat and I as we set out shopping in Delhi. In reality, the actual rug buying/returning event that took place is much less interesting to me than the personal lessons I learned from the experience.
A fool and his money are soon parted
‘A fool and his money are soon parted’ is a phrase that’s so often repeated that the words themselves have almost become meaningless. Reading stories about Bernie Madoff’s Ponzi scheme, or Enron a little further back, I know I’ve become fairly blasé when reading about people who put their blind faith into things they don’t understand and consequently lose their money. Fraud is one of the worst possibilities of true free market capitalism; there are rules and standards set in place by the government to instill some level of confidence in transactions, but only if you assume that the other party is acting in good faith. That’s a big assumption, but one we make (successfully) several times per day.
With this daily level of “success” in good faith transactions, it’s very easy to become complacent in verifying that this assumption still holds. In the U.S. and many other Western nations, information is so readily available on any good or service that we tend to assume that the market (or the legal system) is efficiently minimizing the chance that a business is using asymmetric information to the detriment of the consumer. For example, I’ve got a bar-code reader on my iPhone that tells me the best price of a good anywhere across the Internet. If the store I’m in doesn’t have the best price, they’ve got a chance to match it or I’ll purchase the good somewhere else.
But regardless if the store matches the price or not, I can safely assume that whatever is said to be in the box is actually in the box. The store is competing on price, not on whether they can convince you that they can substitute Y good in place and still tell you that they sold you X. The same thing goes for restaurants, home repair technicians, mail-order catalog sites…you can find out information on the quality of nearly any good or service, and because the seller knows this information is readily available, has motivation to correct the problem before you get there (lest they want to go out of business).
Personal lesson
One of the major things that drew me to the Duke Cross Continent MBA program was the exposure to other cultures by way of visiting disparate countries in different regions of the world. Anyone can read about a country in a textbook, but until you actually experience the country itself, the learning really hasn’t begun. Nor can simple platitudes like “Don’t drink the water” or “Be sure to haggle over everything” count as understanding a country or a culture. The true learning is understanding how YOU have changed (or not) after visiting somewhere.
For me, the lesson I’ve learned from India is that I need to learn control over my thought process. It’s not the obvious things I need to conscientiously watch out for, like not giving money to beggars or not eating street food that has flies all over it, but rather controlling how I think about a situation when all of the ‘Western’ assumptions don’t necessarily hold. The tacit assumption that we all made while in the rug shop was that the salesman stating the quality of the rug could go unchecked. Counting the knots was easily verifiable, so for the salesman to forcefully state the numbers should’ve been enough to say “I know you can verify this, so I’ll tell you the truth.” Yet, the salesman made the calculated gamble that the statement wouldn’t be verified, because culturally, it is okay to mislead the customer in the pursuit of profit. Lesson learned, and something I will take with me for the rest of my days traveling.
Asymmetric information, 
In your first example, knowing that the salesman is feeding me BS doesn't seem like asymmetric information in my favor. In that case, even if I know he's trying to scam me, he's still going to be stubborn in not realizing that I know. Thus, at best we have a stand-off, where he refuses to budge on the price.
I'll take a look at Shantaram when I get a chance, I'm still very interested in India after my trip :)
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