If A has something that B values at that price, and that can't be gotten anywhere else, he will charge what the market will bear; and the market will bear 500k.
Try:
If B wants to buy something that A obtained at a certain cost, and that can't be sold anywhere else, he will pay what the market will bear; and the market will bear $6.
If A refuses to pay $500k, B gets nothing. If there were multiple buyers and A had the highest reservation cost, your answer would work and the problem would be boring.
But as the reversal shows, if B offers $6, A would take it, under similar reasoning. That's what it means to say it costs A $5. No one is going to make a higher competing offer, because no one else can even legally buy the product (and the product is a legal construct, so that means no one else can buy the product, period). It would make as much sense for B to pay $499,999, as it would for A to accept $6.
A has other sources of money
This is immaterial. A has no other use for the easement - he either sells it to B (losing $5), or it doesn't exist (0$). Conversely, B could simply not build a house on her property ($0). The fact that each has other things they can do with their life is immaterial to the transaction at issue, because that transaction has no alternatives - either A & B come to an agreement, or they both get nothing.
Ok, as a point of game theory you've convinced me. As a matter of human psychology, I think A has B over a barrel, although possibly not a half-million-dollar barrel. Although A gets nothing if B refuses to buy, A is not the one who wants a specific, very valuable change in the starting situation. B is the one who wants the status quo changed in a specific way; he has, so to speak, the burden of proof.
Although both parties have an opportunity cost from not making a deal, it seems to me that the opportunity cost "I don't get to do these specific things I had planned on" will weigh more heavily in a human mind than "I don't get some amount of free money, which may be small".
This puzzled me. I'm pretty sure it's one of those unsolvable questions, but I'd want to know if it's not.
Two members of the species Homo Economus, A and B, live next to each other. A wants to buy an easement (a right to cross B's property, without which he cannot bring anything onto his lot) from B so that he can develop his property. B, under the law, has an absolute right to exclude A, meaning that nothing happens unless B agrees to it. The cost to B of granting this easement is $10 - it's over a fairly remote part of his land and he's not using it for anything else. A values the easement at $500,000, because he's got a sweet spot to build his dream house, if only he could construction equipment and whatnot to it. A and B know each others costs and values. They are "rational" and purely self-interested and bargaining costs zero. What's the outcome? I'm guessing it's "Between $5 and $500k," or "There is no deal unless one can credibly commit to being irrational." But I'm really not sure.
This could be asked as "In a bilateral monopoly situation where the seller's reservation price is $5 and the buyer's is $500,000, what is the predicted outcome?" But I figured the concrete example might make it more concrete.
Now that I've written this, I'm tempted to develop a "True price fallacy" and its implications for utilitarian measurement. But that's a separate matter entirely.