Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of speaking to or exchanging messages with the other. The police admit they don't have enough evidence to convict the pair on the principal charge. They plan to sentence both to a year in prison on a lesser charge. Simultaneously, the police offer each prisoner a Faustian bargain. If he testifies against his partner, he will go free while the partner will get three years in prison on the main charge. Oh, yes, there is a catch...If both prisoners testify against each other, both will be sentenced to two years in jail.
The best outcome overall is for both players to remain tightlipped, but the dominant strategy for any individual player of the game is to rat your partner out, which increases your chance of a better outcome.
This classic thought experiment about cooperation and defection has occasioned the spillage of much academic ink, and econ and psychology grad students are constantly subjecting each other to lab experiments on this theme, but no one seems to have thought to try it on actual prisoners until economists Menusch Khadjavi and Andreas Lange of University of Hamburg conducted that experiment and published a study about it this year.
Since University of Hamburg economists lack the authority to actually imprison their test subjects (so far!), the payoffs were in coffee and cigarettes for the prisoners at Lower Saxony's primary women's prison and equivalent amounts of cash for the control group of students.
Prisoners, it turns out, were significantly more likely to cooperate in the classic version of the game, where the two players must make their decisions simultaneously: 56 percent of inmates refused to squeal, compared with 37 percent of students. Only 13 percent of student pairs managed to get the best mutual outcome, compared with 30 percent of prisoner pairs.
The Business Insider writeup of the study included this possible explanation for the discrepancy:
Perhaps prisoners are much more familiar with the high successful "Stop Snitchin" campaign, than they are with John Nash's game theory.