Psychological/Decision
Prisoner's Dilemma
Individual rationality leads to collective irrationality
Overview
A game theory paradox showing how rational self-interest can lead to worse outcomes for everyone.
Two prisoners are interrogated separately. Each can betray the other or stay silent. Betrayal gets you a lighter sentence if the other stays silent, but if both betray, both get harsh sentences. Rational choice is to betray, but both would be better off staying silent.