Answer:
This one looks like a twist on the classical prisoner dilemma. In the classic game, cooperation is usually the best choice on the long term, as taking advantage of the other party leads to distrust and bigger losses altogether. For example, in this scenario, the biggest loss is when Brad hits Mike and Mike tells on Brad, both losing 10. However, on the classical prisoner dilemma cooperation leads to both parties getting a profit, unlike this scenario where cooperation leads neither winning nor losing.
If Brad has not hit Mike, Mike's best immediate option is to tell in him, as it leads to Mike gaining 5 and Brad losing 5. If this is a one time scenario, that is for sure the best response.
However, and this is usually the case in prisoner dilemma situations, this scenario likely repeats several times over, meaning that this response can influence future behavior. Falsely telling on Brad will lead Brad to distrust Mike, thus making Brad more likely to hit Mike in the future and in turn make Mike more likely to tell on Brad. This will lead to the worst case scenario where both players incur substantial losses repeatedly. Therefore, considering a long term win, it's best for Mike to not tell on Brad since it will most likely lead to cooperation.