How does game theory, specifically the Prisoner's Dilemma, play a role in understanding the economic decisions made by individuals and organizations?

Game theory, particularly the Prisoner's Dilemma, helps in understanding how individuals and organizations make economic decisions by analyzing strategic interactions where the outcomes depend on the choices of all parties involved. In the Prisoner's Dilemma, individuals must decide whether to cooperate or act in their own self-interest, leading to insights on how incentives, trust, and cooperation influence decision-making in economic scenariOS.