Alex Tabarrok explains:
Check out the following video from the World Cup 2012 Individual Sprint Track Cycling (similar scenes can be found at the Olympics). The two cyclists, some of the fastest riders in the world, start out by going as slow as possible, almost like something out of Monty Python. In some races the riders will even come to a standstill.
Loyal reader Andy Garin has the analysis:
…in an all-out sprint, drafting creates a huge advantage, as the leading cyclist wears out very quickly. So both drop their speed so low that neither can take advantage of the other–well, at least until the last lap, at which point the advantage to being in front is about the same as the advantage of drafting from behind for 2/3 of a lap or so.
But note that this sort of problem arises because there are only two cyclists in the race. In Tour De France style road racing (or even the Keirin even on track, which is apparently also an Olympic event), one cyclists’ speed decisions only very marginally change the incentives of other riders. But in the Individual Sprint, you see something more like Bertrand-style dupolistic competition–that is, in the latter, one’s strategy is entirely based on the behavior of the other player. Specifically, it’s always better to “undersell” the other player (i.e. to be in the rear) in the first two laps. And thus, you get the odd equilibrium where both set their speed to a negligible exertion level.