Just as important as getting cooperation started were the conditions that allowed it to be sustainable. The strategies that could sustain mutual coop… - Robert Axelrod

In this chapter Darwin's emphasis on individual advantage has been formalized in terms of game theory. This formulation establishes conditions under which cooperation in biological systems based on reciprocity can evolve even without foresight by the participants.

In this essay, we have developed and illustrated an approach for predicting the membership of alliances among firms developing and sponsoring products requiring technical standardization. We started with two simple and plausible assumptions, that a firm prefers (1) to join a large standardsetting alliance in order to increase the probability of successfully sponsoring a compatibility standard, and (2) to avoid allying with rivals in order to benefit individually from compatibility standards that emerge from the alliance’s efforts. We then defined the concept of utility as an approximation to profit maximization in terms of size and rivalry, and discussed the influences on incentives to ally in order to develop and sponsor standards. We showed that the Nash equilibria are the local minima of an energy function with this type of utility function.

The tournament results show that in a Prisoner's Dilemma situation it is easy to be too clever. The very sophisticated rules did not do better than the simple ones. In fact, the so-called maximizing rules often did poorly because they got into a rut of mutual defection. A common problem with these rules is that they used complex methods of making inferences about the other player-and these inferences were wrong. Part of the problem was that a trial defection by the other player was often taken to imply that the other player could not be enticed into cooperation. But the heart of the problem was that these maximizing rules did not take into account that their own behavior would lead the other player to change.