Two people in an interdependent decision-making situation may have compatible interests; however, they often fail to realize this and settle on an outcome less favorable to both parties than another readily available solution. People sometimes settle for less favorable outcomes even when they realize they have compatible interests. The authors refer to this failure to identify and optimize compatible interests as the lose-lose effect, which means a faulty belief or judgment about another person's interests and an outcome or agreement that fails to capitalize on shared interests. Whether the people involved are individuals or organizations, lose-lose agreements result in reduced prosperity and satisfaction for both parties. The authors present a meta-analytic review of 32 experiments that document the pervasiveness of lose-lose agreements. They examine the relationship between the judgments people make about others' interests and lose-lose agreements and the effects of practice on both. They review theoretical explanations of lose-lose agreements.
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