Imagine the following scenario:
You, Bonnie, and your associate Clyde, have robbed a bank. You have been arrested and locked up in separate cells, unable to communicate with each other. After a while, the sheriff enters your cell to interrogate you. When it becomes clear that you are not going to confess, the sheriff admits that he has enough evidence to get both of you convicted for possession of the illegal substances he found in your car, but not enough evidence to get either of you convicted for armed robbery. So he offers you the following deal, and informs you that he will offer Clyde the same deal:
1. If you confess and rat on Clyde, but Clyde remains silent, your account will be enough to lock Clyde up for 10 years. In return for this favour, you get your freedom.
2. If you confess and rat on Clyde, and Clyde also confesses and rats on you, both of you get a prison sentence of 7 years.
3. If you remain silent, but Clyde rats on you, you will face 10 years in prison, whilst Clyde goes free.
4. If you both remain silent, all the sheriff has is the illegal substance, which will land both of you a prison sentence of two years.
Then he leaves you to consider your options.
It is immediately clear that the best thing to do for you and Clyde is to remain silent.
But then you start to doubt. Although you love Clyde, you are not willing to sacrifice 10 years of your life for him. Knowing him, you suspect that he won’t do that for you, either! What’s more, you don’t trust him one bit. Coming to think of it: he’s a self-interested bastard, and cunning too! You decide to take the option that will leave you with the shortest possible prison sentence, assuming that Clyde will do the same.
When the sheriff knocks on your cell door, will you rat or remain silent? How long will each of you spend in prison?
And whatever you choose, what does that tell us about cooperation and rationality?