I’ve heard people say it’s for the principle—because people always jack up the prices [to tourists] at least 200%. Even so, the quick buck we save means so much more for their standard of living than it does to us. I’ve also heard people say 'but if you pay full price, then all the prices will slowly go up.'
I am a pretty serious haggler in Tanzania. I've been stewing over this question though, and have several answers to why I do it, none of which is individually sufficient:
1. I actually gain utility by getting more stuff for a cheaper price. Possible.
2. I am indoctrinated. The world of economics has taught (peer-pressured?) me to believe that I gain utility by getting more stuff for a cheaper price. It is certainly true that I would be happier if my rent went down. But how much utility do I really get from acquiring a beautifully designed fabric for $5.50 instead of $6? Slim returns on fifty cents and I'm already skeptical of the notion that utility gains are objective (i.e. I am fully aware that the $1 earns much more utility for the vendor than it does for me). But, hey, I'm supposed to care about maximizing my utility and its still money, right? Feasible.
3. Price inflation externality. Or, "if you pay full price, all the prices will slowly go up." The only time I experienced this was when I went to the most touristy market in Arusha and tried to make a few few vendor friends the day before all my Americans friends arrived in Tanzania. Generally, though, I'm not under the impression that my individual bargaining has that much of an impact on prices. Not extremely likely.
4. Bravado. Real Tanzanians bargain. I speak Swahili. I know the market. I do not want to seem like an ignorant tourist. I'm hate feeling like an outsider. Doing the stuff that Tanzanians do earns me a little bit more respect- not the kind of respect that a boss has by virtue of her position, but the street-cred kind of respect that you have to work for. It's nuanced, never fully attainable and almost frivolous, but it earns me two points in my favor since I'll never get stop being a white spectacle. Highly likely.
hat tips: CJM & MAM