The three-body energy-dependent effective interaction given by the Bloch-Horowitz (BH) equation is evaluated for various shell-model oscillator spaces. The results are applied to the test case of the three-body problem (triton and He3), where it is shown that the interaction reproduces the exact binding energy, regardless of the parameterization (number of oscillator quanta or value of the oscillator parameter b) of the low-energy included space. We demonstrate a non-perturbative technique for summing the excluded-space three-body ladder diagrams, but also show that accurate results can be obtained perturbatively by iterating the two-body ladders. We examine the evolution of the effective two-body and induced three-body terms as b and the size of the included space Lambda are varied, including the case of a single included shell, Lambda hw=0 hw. For typical ranges of b, the induced effective three-body interaction, essential for giving the exact three-body binding, is found to contribute ~10% to the binding energy.
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