What do we call a situation in which the conflicting parties, by rationally pursuing their self-interest, become caught in mutually destructive behavior?

I beleive the answer is: Social trap

In social trap, the individuals who do the controversial action would most likely obtain short term gains while risking a loss for the collective group in the long run. Example of social trap would be when a manager decided to dump all of the factory waste to the lake that used as main irrigation for the city.

Clean air provides nitrogen