[DennisP]

Yes but the dilemma is that no matter what the other person does, you are better off by defecting. You get a good outcome if you both cooperate. If he defects, you get a horrible outcome if you cooperate. If he cooperates, you get a decent outcome by cooperating, but an even better outcome by defecting.

Since both players think this way, they both defect and get a bad outcome.

Real prisoners don't always defect, but the reason is that they're not actually playing the prisoner's dilemma. The payoff matrix has been altered....eg., by severe penalties for ratting, which give the player a much worse outcome for defecting. Those penalties wouldn't be necessary if the dilemma weren't real. (Another alteration would be if the prisoners care enough about each other so each sees it as a bad outcome if the other suffers. This isn't contrary to game theory, it's just a different set of payoffs.)