Okay, in case anyone is interested, here is what I have so far.
I've got a powerpoint to try and explain it to the students. It's a little complicated, so i think it's a case of doing one or two rounds to help the students understand the concept.
Basically they'll choose someone from their team each round to either Confess or Deny a crime. Depending on the other team's choice they'll either lose or gain points. The aim is to get the lowest amount of points that you can, but you must get less than 0 or neither time wins.
I'll post up how it went.

My co teacher couldn't understand it at first...I really think it's okay if they don't understand it at first and then they can start to as we go on...but we'll see

This is a rather odd one - usually, cops try to get a criminal to rat out and later testify against other criminals for a shorter or a suspended sentence.  (the dilemma here is, will your 'friend' in another room, point a finger at you or will he/she keep quiet.  If he/she keeps quiet and you keep quiet, you both go free, but if he/she points a finger at you and testifies, you go to a prison for a long time - if you both point a finger at each other, you go to prison for shorter periods of time - the question is, did your friend point a finger at you?  or are the cops lying?) 

Yep, I've seen way too many cop shows ;)

Otherwise, the whole 'if you confess, you'll get a shorter sentence' is a police scam.

https://www.avvo.com/legal-answers/does-confessing-a-crime-reduce-the-amount-of-sente-308490.html

I know that you didn't come up with this game, but I feel like someone should have come up with a game where you have guilty, innocents and cops mixed in one - and where the scenario I've just described plays out. 

Then again - am I not describing mafia game?

Also your post isn't the same situation. That is if someone acts alone and is caught. The game is about two people being involved and selling the other person out. If you admit that both of you did it you can get a reduced sentence because you've also given them information to help arrest the other person.

Golden Balls was  a TV show that used this in the end, rather than prison time it was prize money. You can choose to split or steal, with similar results.

Was that the one with jasper carrott? I remember that

Maybe you need a reward then? Prize for the person or team with the most 'money' at the end of the session.

I've thought about doing the prisoner's dilemma too recently. I think that if you want to incentivize them, you need to use various levels of prizes. For example, first place gets 1 small bag of candy, 2nd place gets 5 pieces of candy, 3rd place gets 2 for the group. Then, they will be tempted both to cheat to get the bag or to not cheat and help everyone in both teams get at least one piece of candy.