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→When Paretto efficiency is not the equilibrium state - Prisoner's dilemna
!rowspan=2 style="padding:6px 6px 6px 30px"|''A''
!rowspan=2 style="padding:6px 6px 6px 30px"|''A''
|style="border-style:solid; border-width:1px; padding:6px"|not confess
|style="border-style:solid; border-width:1px; padding:6px"|not confess
|style="border-style:solid; border-width:1px; padding:6px; background:#999999"|A: good / B: good
|style="border-style:solid; border-width:1px; padding:6px; background:#00FF33"|A: good / B: good
|style="border-style:solid; border-width:1px; padding:6px"|A: bad / B: very good
|style="border-style:solid; border-width:1px; padding:6px"|A: bad / B: very good
|-
|-
|style="border-style:solid; border-width:1px; padding:6px"|confess
|style="border-style:solid; border-width:1px; padding:6px"|confess
|style="border-style:solid; border-width:1px; padding:6px"|A: very good / B: bad
|style="border-style:solid; border-width:1px; padding:6px"|A: very good / B: bad
|style="border-style:solid; border-width:1px; padding:6px"|A: OK / B: OK
|style="border-style:solid; border-width:1px; padding:6px; background:#FF3300"|A: OK / B: OK
|}
|}
</div>
</div>
In the one-stage game shown at the right side, prisoners A and B can concurrently choose between "not confess" and "confess". The result can either be "very good", "good", "OK", or "bad".
In the one-stage game shown at the right side, prisoners A and B can concurrently choose between "not confess" and "confess". The result can either be "very good", "good", "OK", or "bad".
The highlighted field ("not confess/not confess") is the Pareto optimal situation.
The green field ("not confess/not confess") is the Pareto optimal situation. However, the red field in the [[Nash equilibrium]] solution.
However, the Pareto optimal solution is not the equilibrium solution. For example, in "not confess/confess" ("bad" for A, "very good" for B), A could switch to "confess". The result improves A's result to "OK" while changing B's result also to "OK". However now at "confess/confess", if B changes to "not confess", his result becomes "bad". Thus, "confess/confess" would be the equilibrium outcome.
However, the Pareto optimal solution is not the equilibrium solution. For example, in "not confess/confess" ("bad" for A, "very good" for B), A could switch to "confess". The result improves A's result to "OK" while changing B's result also to "OK". However now at "confess/confess", if B changes to "not confess", his result becomes "bad". Thus, "confess/confess" would be the equilibrium outcome.