A situation where individuals or groups, acting in their own short-term self-interest, create a negative outcome for everyone involved, including themselves. This predicament arises because individual choices, when aggregated, lead to a collectively undesirable result. A classic example is overfishing: each fisher seeks to maximize their individual catch, but if all fishers do the same, the fish population collapses, harming everyone in the long run.
The concept is vital for understanding a wide array of societal problems, from environmental degradation to economic instability. Recognizing these situations is the first step towards mitigating their harmful effects. Its roots can be traced back to game theory and the study of collective action problems, highlighting the tension between individual rationality and collective well-being. Over time, it has become a core concept in fields such as environmental science, economics, and political science, informing policy decisions and strategies aimed at promoting cooperation and sustainability.