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The user who asked this question has offered the bounty worth 500 but their own reputation is just 314. Is it possible to offer a bounty worth more than one's own reputation?

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As soon as you put a bounty on a question the reputation is deducted from your total - as there are no refunds on bounties. As such the resulting "lower than posted" rep means they originally had around 800 rep prior to posting the bounty.

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    For example, my rep at the time of this comment is 1469. If I put a 500 rep bounty on a question, my rep would immediately decrease to 969, as per the reason @Marco described. – Thomas Ward Jul 11 '11 at 18:16
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No they can't offer more bounty then they currently hold but bounty is immediately subtracted when offered. If a user has 100 reputation and they offer a +50 bounty their rep immediately decreases to +50 reputation.

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