They're probably not laughing at you. They are either confused because the foreigner got a decent price out of them, or grateful you didn't hold on for a lower rate. It's the ones that don't haggle that they're laughing at...
He can pull it off, despite having grown up in Chicago and being white as the driven snow. Personally I'm glad that Japan is largely a sticker-price society, the stress would wreck me.
If you pay a lot you reward the person who sells it to you for high balling the price, lying usually and aggressive selling manor.
In addition you make the price high for others who can't afford high prices such as people travelling for 6months+ which have low budgets.
Take Morocco, for example. They'll try and charge you hundreds (or thousands) of dollars for a carpet ( http://www.ehow.com/how_2318956_moroccan-carpet-less-than-mi... ). Even t-shirts in China will go for a few bucks or more.