While it might be expected that those on the short end of financial negotiations suffer stress, new research suggests that when people make very low offers they also experience emotional distress.

In the new study, Australian researchers examined the physiological reactions of participants in a financial bargaining game.

Their findings, published in scientific journal PLOS ONE, found that not only those receiving relatively low offers experienced stress but also those that make low offers, when compared to people who made more generous offers.

Participants were asked to play the Ultimatum Bargaining Game, in which players decide how to divide a sum of money given to them.

Player one (the proposer) proposes how to divide the money and player two (the responder) must accept or reject the offer. If player two rejects it, neither player receives any money.

Uwe Dulleck, Ph.D., a professor at Queensland University and lead author, said the study analyzed the emotional reactions of participants in ultimatum situations.

“We wanted to understand the physiological reactions people have in these situations so responders and proposers wore heart rate monitors to track Heart Rate Variability (HRV) — the variation in the time interval between heart beats.”

“We found low offers, typically below 40 percent of the total, increased HRV activity and stress levels in both the proposer and responder.”

Co-author Markus Schaffner, Ph.D., said “guilt” felt by the proposer about to make a low offer was one possible explanation for the increase in stress.

“This can be seen as evidence that we empathize with people and put ourselves in their shoes in these sorts of situations,” he said.

“The results indicate we have negative feelings when we treat someone unfairly, for example by offering below 40 percent of the total in the game. There is an emotional and physiological cost and we feel uncomfortable.

“The responder also feels stressed with low offers, first, because they have suffered from unfairness, and second, because they have an opportunity to punish the proposer by rejecting the offer and leaving them both without any money.

“Our preference is to be fair and it is likely proposers experience pleasure when making fair offers.”

“The QuBE group was one of the first to use HRV in economic experiments to measure mental stress in economic decision making,” Dulleck said.

“The question which remains without a clear answer is: do emotions dictate behavior or does behavior induce emotional response?” he said.

“Our results can give no definite answer to this question, but do clearly indicate a link between emotional state and the decision.”

Source: Queensland University