Win-Win, Win-Lose, and Lose-Lose Situations

ByBrad Spangler

January 2013Original PublicationSeptember 2003, updated January2013 by Heidi Burgess

The BasicsWin-win, win-lose, and lose-lose are game theory terms that refer to the possible outcomes of a game or dispute involving two sides, and more importantly, how each side perceives their outcome relative to their standing before the game. For example, a "win" results when the outcome of a negotiation is better than expected, a "loss" when the outcome is worse than expected. Two people may receive the same outcome in measurable terms, say $10, but for one side that may be a loss, while for the other it is a win. In other words, expectations determine one's perception of any given result.Win-win outcomes occur when each side of a dispute feels they have won. Since both sides benefit from such a scenario, any resolutions to the conflict are likely to be accepted voluntarily. The process of integrative bargaining aims to achieve, through cooperation, win-win outcomes.Win-lose situations result when only one side perceives the outcome as positive. Thus, win-lose outcomes are less likely to be accepted voluntarily. Distributive bargaining processes, based on a principle of competition between participants, are more likely than integrative bargaining to end in win-lose outcomes--or they may result in a situation where each side gets part of what he or she wanted, but not as much as they might have gotten if they had used integrative bargaining.Lose-lose means that all parties end up being worse off. An example of this would be a budget-cutting negotiation in which all parties lose money. The intractable budget debates in Congress in 2012-13 are example of lose-lose situations. Cuts are essential--the question is where they will be made and who will be hurt. In some lose-lose situations, all parties understand that losses are unavoidable and that they will be evenly distributed. In such situations, lose-lose outcomes can be preferable to win-lose outcomes because the distribution is at least considered to be fair.[1]

In other situations, though, lose-lose outcomes occur when win-win outcomes might have been possible. The classic example of this is called the prisoner's dilemma in which two prisoners must decide whether to confess to a crime. Neither prisoner knows what the other will do. The best outcome for prisoner A occurs if he/she confesses, while prisoner B keeps quiet. In this case, the prisoner who confesses and implicates the other is rewarded by being set free, and the other (who stayed quiet) receives the maximum sentence, as s/he didn't cooperate with the police, yet they have enough evidence to convict. (This is a win-lose outcome.) The same goes for prisoner B. But if both prisoners confess (trying to take advantage of their partner), they each serve the maximum sentence (a lose-lose outcome). If neither confesses, they both serve a reduced sentence (a win-win outcome, although the win is not as big as the one they would have received in the win-lose scenario).

This situation occurs fairly often, as win-win outcomes can only be identified through cooperative (or integrative) bargaining, and are likely to be overlooked if negotiations take a competitive distributive) stance.

The key thing to remember is that any negotiation may be reframed (placed in a new context) so that expectations are lowered. In the prisoner's dilemma, for example, if both prisoners are able to perceive the reduced sentence as a win rather than a loss, then the outcome is a win-win situation. Thus, with lowered expectations, it may be possible for negotiators to craft win-win solutions out of a potentially lose-lose situation. However, this requires that the parties sacrifice their original demands for lesser ones.