Win-win, win-lose, and lose-lose are game theory terms that refer to the possible outcomes of agame 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 theoutcome of a negotiation is better than expected, a "loss" when the outcome is worse thanexpected. Two people may receive the same outcome in measurable terms, say $10, but for oneside that may be a loss, while for the other it is a win. In other words, expectations determineone'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 acceptedvoluntarily. 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-loseoutcomes are less likely to be accepted voluntarily. Distributive bargaining processes, based ona principle of competition between participants, tend to end in win-lose outcomes.

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. In some lose-lose situations, all partiesunderstand that losses are unavoidable and that they will be evenly distributed. In suchsituations, lose-lose outcomes can be preferable to win-lose outcomes because the distributionis 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 prisonersmust 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 thiscase, the prisoner who confesses and implicates the other is rewarded by being set free, and theother (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 goesfor prisoner B. But if both prisoners confess (trying to take advantage of their partner), theyeach serve the maximum sentence (a lose-lose outcome). If neither confesses, they both serve areduced sentence (a win-win outcome, although the win is not as big as the one they would havereceived in the win-lose scenario).

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

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