Prisoner’s Dilemma

Definition ∞ The Prisoner’s Dilemma is a fundamental concept in game theory illustrating why two rational individuals might not cooperate, even when it appears to be in their best collective interest. It describes a situation where individual incentives lead to a suboptimal outcome for both parties when they act independently. This scenario highlights the tension between self-interest and mutual benefit. The dilemma demonstrates the challenges of achieving cooperation in the absence of trust or enforceable agreements.
Context ∞ In blockchain and cryptocurrency discussions, the Prisoner’s Dilemma is often referenced to explain the design of consensus mechanisms and incentive structures. News articles might use it to illustrate why participants in a decentralized network are incentivized to act honestly, even if they could potentially cheat. Debates often concern how protocol rules and economic models are constructed to align individual self-interest with the collective security of the network. Understanding this concept aids in analyzing the stability and robustness of decentralized systems.