Chinese learn game theory?

Haggling over prices is one of the quintessential rituals of visiting China. Anybody who has ever been there knows what I mean. Cat calls of "I remember you, I remember you", "2 for $1!!! OK 3 for $1!!! 4 for $1, final offer!!!", and "I make good deal, you first customer" (at 4pm) can get anyone fired up for some serious sport-haggling. You'd be amazed how hard you will fight over 25 cents.

Imagine my disappointment to find very little haggling over the price of custom tailored dress shirts at the Yashow market in Beijing. All tailors quoted an initial price of 100 RMB and were unwilling to negotiate. They didn't even chase me down when I walked away after expressing an interest through a counter-offer.

So I started thinking... maybe these guys have just decided to not compete with each other? Of course in the US this would be illegal, but a country where factories dump benzene into the water would hardly bat an eye at price fixing.

In game theory terms this is referred to as a Nash Equilibrium. That means that all players are maximizing their success and have no reason to change their tactics unless someone else changes their tactics first. If you don't like the math on the wikipedia page, you can read the layman's explanation of Tom, Dick, and Harry's dating strategy.

Also, if they're smart enough to do this, why can't they design a mattress whole sole benefit over sleeping on the ground is a fitted sheet?