 Here is how players might reason. At her turn, E faces a standard decision problem, with two available actions and the outcome of action left better for her than that of right. So she will choose left. Knowing this, A expects that his choosing right will give him outcome 0, while going left gives him outcome 1, so he chooses left. As a result, both players are worse off than they would have been, had they played right/right. The reasoning in this scenario, in short, leads to an outcome that is not Pareto-optimal.