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"police informer," 1868, American English; earlier "one who betrays the unwary (or is used to betray them)," 1821, originally a decoy bird (1812); said to be from decoys being fastened to stools to lure other pigeons. But perhaps related to stall "decoy bird" (c.1500), especially "a pigeon used to entice a hawk into the net" (see stall (n.2)). Also cf. pigeon.
An informer, especially for the police: “Lefty figured out that Mugsy was the stool pigeon when he saw him talking to the warden.”
[1930+ Underworld; fr earlier sense ''decoy,'' fr the early 1800s practice of fastening pigeons and other birds to stools or stands as decoys; this term was applied to the decoy or ''hustler'' for a faro bank]