Cooperative equilibria in finite horizon noncooperative supergames

It is well known that cooperative outcomes can be supported by noncooperative equilibrium strategy combinations in games that are infinitely repeated; however, the example of the repeated prisoner's dilemma has led people to conclude that such cooperative outcomes cannot be sustained if the game is repeated finitely often. In this paper it is proved that the belief about finitely repeated games is false. Conditions are given that allow the existence of cooperative outcomes in finitely repeated games that are supported by subgame perfect noncooperative equilibrium strategies.