Game Theory
Mathematical models of strategic interaction among rational decision-makers.
The Nash Equilibrium
A state where no player can improve their outcome by unilaterally changing their strategy, assuming the other players' strategies remain unchanged.
| Prisoner's Dilemma | B Stays Silent | B Betrays |
|---|---|---|
| A Stays Silent | -1, -1 | -3, 0 |
| A Betrays | 0, -3 | -2, -2 (Nash) |
The tragedy of the Prisoner's Dilemma is that rational self-interest leads to a globally suboptimal outcome.