I am in a developing country and a guy tries to sell me something. It's usually a drink, a watch, sunglasses, or something similar. I get quoted an obviously-inflated price. The guy wants to get as much money from me as possible. He gauges how much I would spend, based on my skin color, my clothes, the way I handle myself.
On the one hand, I should bargain him to death. I should quote some ridiculously low price, then we go back and forth, I pretend to leave, he drop the price further, and finally we agree to the exchange which, as the Lonely Planet suggests, is typically 7-10 times less than the starting price.
On the other hand, I should give him as much money as possible. This is a developing country, they need money. So much of American charity goes to developing countries. But it's usually far away and some of it goes toward administrative costs. Here is a person in a developing country, so what are you waiting for? Empty your pockets!
Of course, reality is more complex. Developing countries don't need money, they need smart investments. Simply giving away money feeds a cycle of dependency. Many people paying too much for an item inflates its price for others. Perhaps it distorts market forces by falsely inflating demand; although perhaps not if you planned to buy the item anyway. And paying an haggled-down price still gets me the money and gets the seller profit -- or else he likely wouldn't sell.
Maybe the confusion I feel about haggling with a merchant in a developing country can be resolved with a premium I pre-commit to pay for anything I buy. I would haggle down the price, then pay the agreed price plus the premium. A guilt premium, perhaps?
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