The relationship between the error propagation effect and the hypothesis number of a multi-hypothesis motion compensated prediction (MHMCP) coder is analyzed in this work. MHMCP enhances the error resilient property of compressed video but demands a higher bit rate for the coding of motion information. We study the rate-distortion performance of MHMCP in an error prone environment, and then perform extensive experiments to confirm analytical results. Several design guidelines for the MHMCP coder are drawn based on the analytical and experimental results.