Lowballing That Offer? That’s Going to Stress You Out

Research from Queensland University of Technology in Brisbane Australia has now shown that low balling someone in the ultimatum game can actually be detrimental to a person’s happiness. In the ultimatum game a player is given a sum of money to split up between them and another player. They will extend an offer to the second player. If they accept the offer then the game is over and they walk away with the offer, if the second player declines the offer they both walk away with nothing. It has been seen that different cultures will approach this game differently but a recent study measured how the people felt while making these offers. By testing the participant’s heart rates they found that those who offered the second player less than 40% of the money had increased heart rate variability and stress. This is interesting to think on the idea of the feelings of the player determining the offer. Usually when thinking about the Ultimatum game we only consider how the second player feels and whether they will accept the offer or not. However, this leads into more insight on why players naturally tend to offer a fair value rather than being greedy. Their specific study found that real stress was felt while offering anything less than a fair value, and offers below 20% (we can consider this unfair) were rejected half of the time. This shows the results of an unfair offer will often lead to everyone walking away with nothing but stress. So is the stress of lowballing worth it? The stress that can come from purchasing a house is an example of a situation where this could have serious implications where it would certainly be in a player’s interest to just play fair.

http://www.forbes.com/sites/kateashford/2014/10/31/lowballing-that-offer/

Miles Royer

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1 thought on “Lowballing That Offer? That’s Going to Stress You Out”

  1. Ah! So it seems that maybe the concept of socially optimal comes into play. By being fair it maximizes everyone’s payoffs! It also makes sense intuitively because when we a person gives a friend a gift it brings that person a certain about of happiness. After all, everyone acts in their own best interest right? (and we still give gifts and treat people fairly).

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