"Covenants struck without the sword are but words"
Thomas Hobbes, Leviathan.

Imagine you are an anti-government radical, and you and your revolutionary partner have been captured by the secret police and charged with sedition.  The prosecutor interrogates each of you separately and offers each of you the following deal:

If one of you defects by incriminating your partner, while the partner remains silent, then the defector will be convicted of a lesser crime and his sentence reduced to one year for providing information, while the silent confederate will be convicted of a more serious crime and given a four-year sentence for his refusal to provide information.

If you both stay silent, there will be insufficient evidence to convict either of you of the more serious crime, and you will each receive a sentence of two years for a lesser offence.

If you both defect by incriminating each other, you will both be convicted of the more serious crime, but given reduced sentences of three years for providing information.

In short, each of you has two choices: COOPERATE with your confederate by remaining silent, or DEFECT from the confederacy by incriminating your partner.  

We thus have four possible outcomes:

1. You defect and your partner cooperates (1 year for you, 4 for him).
2. You both cooperate (2 years each).
3. You both defect (3 years each)
4. You cooperate, and your confederate defects (4 for you, 1 for him).

These four outcomes are represented in the “payoff matrix.”  From a purely selfish point of view, the best outcome for you is 1, followed by 2, 3 and 4; for your confederate 4 is the best option, followed by 2, 3 and 1.  Given this ordering of preferences, you should, as a rational, purely selfish individual, always defect no matter what your confederate does. 

Why? Consider this ...