The correct answer option is both parties are made worse off by following their own self-interests . Why this option is correct Individual vs. Group Rationality : In a classic Prisoner's Dilemma , each player has a dominant strategy to betray the other (act in strict self-interest). When both players independently choose this selfish path, they reach a Nash Equilibrium where both receive a harsh punishment. Suboptimal Outcome : If they had instead cooperated and remained silent, they would have both received a significantly lighter sentence. Therefore, pursuing pure self-interest leaves both parties worse off than mutual cooperation. Why the other options are incorrect ❌ both parties gain by following their own self-interests : This is false because the fundamental paradox of the game is that individual self-interest destroys the potential for mutual gain. ❌ no one gains because each acts independently : This is inaccurate because players still receive a payoff (even if it is sub-optimal), and in variations where one betrays while the other cooperates, the defector gains immensely by going free. ❌ one party is made better off and another worse off by following independent self-interests : This describes a specific asymmetric outcome (Defect/Cooperate). However, because both players act logically and independently, both will choose to defect, leading strictly to the mutual worst-case scenario rather than an uneven split. Would you like me to map out a payoff matrix table to visualize how these choices interact, or discuss how this applies to economic oligopolies ?
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