Bacteriophages are the most abundant organisms on the planet and both lytic and temperate phages play key roles as shapers of ecosystems and drivers of bacterial evolution. Temperate phages can choose between (i) lysis: exploiting their bacterial hosts by producing multiple phage particles and releasing them by lysing the host cell, and (ii) lysogeny: establishing a potentially mutually beneficial relationship with the host by integrating their chromosome into the host cell's genome. Temperate phages exhibit lysogeny propensities in the curiously narrow range of 5-15%. For some temperate phages, the propensity is further regulated by the multiplicity of infection, such that single infections go predominantly lytic while multiple infections go predominantly lysogenic. We ask whether these observations can be explained by selection pressures in environments where multiple phage variants compete for the same host. Our models of pairwise competition, between phage variants that differ only in their propensity to lysogenize, predict the optimal lysogeny propensity to fall within the experimentally observed range. This prediction is robust to large variation in parameters such as the phage infection rate, burst size, decision rate, as well as bacterial growth rate, and initial phage to bacteria ratio. When we compete phage variants whose lysogeny strategies are allowed to depend upon multiplicity of infection, we find that the optimal strategy is one which switches from full lysis for single infections to full lysogeny for multiple infections. Previous attempts to explain lysogeny propensity have argued for bet-hedging that optimizes the response to fluctuating environmental conditions. Our results suggest that there is an additional selection pressure for lysogeny propensity within phage populations infecting a bacterial host, independent of environmental conditions.