When one adds all the necessary assumptions and limitations to this problem to make the decision one particular agent faces analogous to a Prisoner's Dilemma one does not find that $0.05 is equivalent to 'defect'.

It doesn't need to be. The mapping to the PD here is that defection is continuous rather than binary. It generalizes the concept of defection in the canonical PD so that you can choose a level of defection, and the most "defective" (!) person, if they aren't equal, diverts utility to him/herself at the expense of the other players.

Just like how in the standard PD, a defection when the other player doesn't will divert utility to yourself.