Here is a STEP BY STEP on how to reproduce this problem.  Check it out:

Step 1, just default cube.

Step 2, add Loop Cut and Slide to place a control loop like this:

Now just keep adding edge loops with Loop Cut and Slide, as shown below:

Then, switch to face mode, and select the 4 faces on the inside, like so:

Finally, just do a simple INSET operation, using the Inset tool, with REGION ticked, then adjust the amount, but keep height at 0.

This can not be how INset is intended to work in Blender, I hope.  So, is it a bug?  Is it just poor programming?  Is it really how it behaves?

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Tools :  3dsmax 2015, Daz Studio 4.6, PoserPro 2012, Blender v2.74

System: Pentium QuadCore i7, under Win 8, GeForce GTX 780 / 2GB GPU.