The Prisoner's Dilemma involves two prisoners who are being interrogated separately. Each prisoner has two options: to cooperate with the other by remaining silent or to betray the other by providing evidence against them. If both prisoners cooperate and remain silent, they both receive light sentences. If one betrays while the other cooperates, the betrayer goes free while the cooperator gets a heavy sentence. If both betray, they both receive moderate sentences. The dilemma highlights how rational decision-making can lead to a worse outcome if both parties act solely out of self-interest rather than choosing to cooperate.