Prisoner's dilemma
Keywords:  gametheory, noncooperative game theory 
Date: 
 In game theory, the "Prisoner's dilemma" refers to a thought experiment where, given a particular game and set of rules, two players will select optimum individual strategies that actually present the worst outcome for both.
The scenario:

Given:
 Prisoners
A
andB
are: charged with assault (a "lesser" charge)
 Punishment (negative reward): 1 year in prison
 suspected of armed robbery (a "more serious" charge)
 Punishment (negative reward): 3 years in prison
 charged with assault (a "lesser" charge)
 Prisoners are not allowed to communicate
 Prisoners are each faced with a decision between "snitching" on the other prisoner (betrayal, noncooperation) in exchange for 1 year removed from their punishment or staying silent (cooperation)

Both prisoners are "Rational" (each will make the best choice to minimize their punishment given what they know)

If both prisoners betray each other, both serve 2 years in prison for armed robbery charge minus the 1 year removed for their betrayals

If one prisoner snitches and the other prisoner remains silent, the snitching (defecting/betraying) prisoner goes free and the silent (cooperative) prisoner serves all 3 years in prison for the more serious charge (armed robbery)

If both prisoners remain silent, they're both convicted of the lesser charge (assault) and serve 1 year in prison each

Payoff matrix:
A \ B B silent B betrays A silent 1 \ 1 3 \ 0 A betrays 0 \ 3 2 \ 2

 Prisoners

Then:
 Each player's best individual strategy (without knowing what the other player will do) is to betray the other, since it results in a bestcase reward of going free and a worstcase reward of 2 years in prison (if betrayed)
 This "best individual strategy" is actually the worst corporate/cooperative/coalitional strategy because it results in the greatest net punishment (negative reward): 4
 The actual best strategy is for both players to cooperate, but the communication barrier between the players prevents them from "rationally" doing so, despite their best interests