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In the one-stage game shown at the right side, participants A and B can concurrently choose between "1" and "2". 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 ("2/2") is the Pareto optimal situation. All other situations can be improved.

The highlighted field ("confess/confess") is the Pareto optimal situation. All other situations can be improved.

For example, in "1/2" ("bad" for A, "very good" for B), A could switch to "2". The result improves A's result to "OK" while changing B's result also to "OK".  However now at "2/2", if B changes to 1, his result becomes "bad".  Thus, "2/2" is Paretto optimal.

For example, in "not confess/confess" ("bad" for A, "very good" for B), A could switch to "2". 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" is Paretto optimal.

Generally in a game with finite steps, the efficient outcome may not necessarily be the outcome that maximizes aggregate utility and there may even exist an outcome that has greater utility for every participant.  However, in a game with infinite steps, it can be shown that the efficient outcome does maximize aggregate utility.

Generally in a game with finite steps, the efficient outcome may not necessarily be the outcome that maximizes aggregate utility and there may even exist an outcome that has greater utility for every participant.  However, in a game with infinite steps, it can be shown that the efficient outcome does maximize aggregate utility.