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Three prisoners and colored hats in a line

Asked at SIG, IMC

Three prisoners are told there are 5 hats: 3 white and 2 black. Three of the hats are placed on their heads; the other two are hidden. The prisoners stand in a line: the back prisoner sees the two in front, the middle sees only the front, and the front sees no one. None can see their own hat.

Starting from the back, each is asked "Do you know the color of your hat?" The back prisoner says "No." The middle prisoner says "No." Then the front prisoner, who can see nothing, says "Yes, I know mine."

What color is the front prisoner's hat, and how does he know?

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