Everyone loves a bargain. Getting something for less than it’s worth feels like winning in the game of life. But the key to happiness may not lie in being the One Who Saved the Most Money—particularly if it’s at the expense of others.
When someone makes a low offer, he feels stress—and so does the person on the receiving end of that offer, according to a recent study from the Queensland University of Technology in Brisbane, Australia.
The researchers came to this conclusion after testing study participants’ heart rates while they were making and receiving offers—both fair and unfair. The study involved an Ultimatum Bargaining Game, in which two participants decide how to split a sum of money they’ve been given. The first player must suggest a split, and the second player must accept or reject the offer. Rejection of the offer results in no money for anyone. Each player wore a heart rate monitor throughout.
On average, players offered the other participant 30% to 40% of the total, and very few people went above 50% or below 10%. Offers below 20% were rejected about half of the time.
In general, those who offered less than 40% of the total experienced increased heart rate variability and stress—and so did the responders.
Offering someone less than seems fair can make you feel stressed, study finds. (Photo credit: Ted... [+]
“I would expect that people feel more stress if they make offers that are significantly less than what is perceived as fair,” says Uwe Dulleck, a professor of economics and finance at QUT’s business school and one author of the study. He points out that behavioral evidence from other studies that did not record physiological data but used higher stakes—such as large sums of money—show similar behavior. “Thus, it is likely that our findings apply to activities where large sums of money are involved,” Dulleck says. “For example, making an offer on a house.”
What that means isn’t quite clear. Should you stop haggling at flea markets because making low offers will make you feel guilty? Not necessarily. “It’s important to remember that we do not expect that this stress related to a single decision has long-term health impacts for that person,” Dulleck says. It just may not feel so great in the moment.
If you’re chasing the feel-good vibe, studies show that being generous and giving to others are statistical mood boosters. One Harvard study found that giving money to someone else made respondents happier than spending it on themselves. And charitable givers, take note: researchers at the University of British Columbia and Harvard Business School found that you’ll be happier if you make a charitable donation through someone connected to the cause, versus donating anonymously.
If you’re struggling, just try to be fair. “This [study] can be seen as evidence that we emphathize with people and put ourselves in their shoes in these sorts of situations,” co-author Markus Schaffner, Ph.D., manager of the QuBE Laboratory for Economic Experiments at QUT, said in a statement. “Our preference is to be fair, and it is likely proposers experience pleasure when making fair offers.”
