The Prisoner's Dilemma is a classic example of which approach?

• A. Game Theory
• B. Behavioral Economics
• C. Cognitive Psychology
• D. Decision Science

Answer: (A)

This is a classic demonstration of game theory, which studies strategic interactions where each player's outcome depends on what the other does. In the Prisoner's Dilemma, each person can choose to cooperate or defect, and the payoff for each depends on the partner’s choice. Although mutual cooperation would yield a better joint outcome, rational self-interest drives each to defect, leading to a Nash equilibrium of both defecting. This tension between individual incentives and collective welfare is the central insight of game theory, making it the best framework for understanding this scenario. It’s not primarily about cognitive processes (cognitive psychology) or about how psychology biases economic decisions (behavioral economics), nor is it a broad label like decision science, though those fields touch on related ideas.