This is an issue that makes me feel conflicted in the case where there are already a lot of people cheating. If there's already a lot of people cheating, it doesn't make practical sense not to cheat, you're really just putting yourself at a big unfair disadvantage, and making an inefficient use of energy that could be used else where. It's unethical to join in the cheating, but a situation like that feels like there's just a lot of arguments to cheat. I think making the best of that situation would be to participate in the cheating but also make the best effort to understand the material as opposed to leveraging cheating to min-max on effort-grade.
On the other hand, all the effort could pay off in an unexpected way down the line because all the cheaters pushed you to achieve more than you would have normally, plus the ethical implications.
Full disclosure, I did have a situation where cheating like that happened, and I did take it. It was for a pretty irrelevant course, and I don't feel bad at all about it. I also haven't made much use of the course material afterwards.
In the best case, you get nothing. Most probably half of the students turn against you. And possibly the teacher himself takes revenge on you for snitching. Some teachers are of the opinion that “snitches get stitches”, often as a way to cope with their own lack of teaching, and sometimes they see it as a good life lesson for the student.
So report the teacher. The whole snitches get stitches thing needs to stop. We aren’t in a goddamned prison yard. And if someone actually threatens you, call the police. Raise hell about it. Gangster, prison yard culture needs to die. Cheating is never ok. Cheaters should be thrown out of school with zero second chances. People in the US are often going into debt for tens and even hundreds of thousands of dollars for college — when people cheat, that diminishes the value of that extraordinary expense. Not to mention honor and integrity ought to matter.
When I was in high school, a bunch of AP students cheated off the valedictorian our senior year...when it was exposed, they hushed everything up rather than allowing a scandal that would ruin the school's and the students' reputations (some of which were bound for Ivy League schools in a few months' time).
Sometimes, the entire community will protect its cheaters.
As Electrical engineering TAs in the late 80's, we knew who was copying class homework assignments from their classmates based on transcription errors in the handwritten work that was turned in. Since the class professor couldn't care less about the cheating, we would consistently score the source assignments a few points less than the ones that had copied the assignment. We kept this up for the entire semester.
Option C, help the others students that cheat, let them copy your work, or even help them directly with the work. (Especially for things like home exercises, if not actual exams).
After you graduate, you will have a network of friends that consider you a super-smart, trustworthy, loyal and friendly person.
Chances are, you will learn more than the rest, and end up with a high GPA. And some of the lost opportunity to socialize in bars and clubs, and build networks that way, will be compensated by the relationships with people you helped.
Btw, this same behavior can still work once you're in a job. If you get a reputation as someone who can provide help when people are stuck in some difficult problem, and not shaming them for it to their boss, that tends to reflect positively back to you over time.
On the other hand, all the effort could pay off in an unexpected way down the line because all the cheaters pushed you to achieve more than you would have normally, plus the ethical implications.
Full disclosure, I did have a situation where cheating like that happened, and I did take it. It was for a pretty irrelevant course, and I don't feel bad at all about it. I also haven't made much use of the course material afterwards.