The Three-Legged Race: Cooperating to Compete

In the prisoners' dilemma contest several couples play the finitely repeated prisoners' dilemma. Each time a couple cooperates, it scores a point, and a small prize is awarded to the winners. An analogue of the “folk” theorem for repeated games is obtained with subgame perfect equilibrium (SPE). Next, allowing renegotiations within each team, we study a solution concept based on renegotiation-proof equilibrium (RPE). If couples are informed about the score, no equilibrium exists. If they are not, cooperation is the unique equilibrium outcome.Journal of Economic LiteratureClassification Number: C72.