In game theory, Prisoner's Dilemmas have no solution. Because the two prisoners, or the merchant and customer, can't trust each other, they both end up defecting. The larger societal dilemmas—the arms race, the Tragedy of the Commons, and the free-rider problem—are similarly unsolvable. Defecting is the only course that makes logical sense, even though the end result will be disastrous for the entire group.
But that's not how people generally operate. We cooperate all the time. We engage in honest commerce, although Enron and AIG and Countrywide are some pretty spectacular exceptions. Most of us don't overfish, even though the few of us who do have depleted the ocean's stocks. We mostly vaccinate our children, despite the minor risk of an adverse reaction. Sometimes, even, we don't rat on each other in prison.1
Prisoner's Dilemmas involve a risk trade-off between group interest and self-interest, but it's generally only a dilemma if you look at it very narrowly. For most people, most of the time, there's no actual dilemma. We don't stand at the checkout line at a store thinking: “Either the merchant is selling me a big screen TV, or this box is secretly filled with rocks. If it's rocks, I'm better off giving him counterfeit money. And if it has a TV, I'm still better off giving him counterfeit money.” Generally, we just pay for the TV, put it in our car, and drive home. And if we're professional check forgers, we don't think through the dilemma, either. ...