Ethics and Game Theory

I've really been thinking about my professor's question on last Monday.  Are we, as a society, capable of making ethical decisions? 
I've been trying to find a really good reason for why people continue to make unethical decisions when they know the manner and magnitude will land them in positions of censure, bankruptcy, or even prision.
I've gotten interested in game theory.  When I have more time, I will study this in depth. 
Game Theory analyzes the function of morality.   One of the most famous examples is "the prisoner's dilemna"
The example below is from Stanford's Enclyclopedia of Philosophy.
     Tanya and Cinque have been arrested for robbing the Hibernia SavingsBank and placed in separate isolation cells. Both care much more about their personal freedom than about the welfare of their accomplice. A clever prosecutor makes the following offer to each. “You may choose to confess or remain silent. If you confess and your accomplice remains silent I will drop all charges against you and use your testimony to ensure that your accomplice does serious time. Likewise,if your accomplice confesses while you remain silent, they will go free while you do the time. If you both confess I get two convictions,but I'll see to it that you both get early parole. If you both remain silent, I'll have to settle for token sentences on firearms possessioncharges.  If you wish to confess, you must leave a note with the jailer before my return tomorrow morning."
So the question is:  are they both better off confessing or being silent? 
      According to the Stanford writing, each participant will  be better off confessing but if both confess, the punishment is greater than if both remained silent. 
     As I get more into game theory I will be better able to apply it to various cases and may be able to use it to better answer my professor's question.