In the context of Game Theory, which of the following scenarios best exemplifies a situation where individuals face a dilemma between cooperation and self-interest, ultimately leading to a suboptimal outcome?

In Game Theory, a classic example of a dilemma between cooperation and self-interest is the Prisoner's Dilemma. Imagine two friends who are caught for a minor crime and are interrogated separately. If both stay silent, they each get a light sentence, but if one betrays the other by confessing while the other remains silent, the betrayer goes free while the silent one faces a heavy sentence. If both confess, they both get moderate sentences. This situation shows how, despite the best outcome being achieved through cooperation (staying silent), the fear of being betrayed often leads both to act in their self-interest, resulting in a worse outcome for both.