The Prisoner's Dilemma is one of the simplest yet most widely applicable situations studied in game theory. The Prisoner's Dilemma was discovered by Melvin Dresher and Merrill Flood at the Rand Corporation in 1950, but its name comes from the following story, which was supplied shortly afterward by the Princeton mathematician Harold Kuhn. The story and its analysis have been used in different ways to draw forth ethical implications.

The Basic Story

Two men are caught committing an illegal act. If neither one confesses, there is enough evidence to ensure that each man will get one year in jail. If both confess, each one gets five years in jail. However, if one confesses and the other does not, the man who does not confess gets ten years in jail but the confessor who incriminates his partner gets off free. This is a special...