Proposition 6. The strategies which can invade ALL D in a cluster with the smallest value of p are those which are maximally discriminating, such as … - Robert Axelrod

Four factors are examined which can give rise to interesting types of social structure: labels, reputation, regulation, and territoriality. A label is a fixed characteristic of a player, such as sex or skin color, which can be observed by the other player. It can give rise to stable forms of stereotyping and status hierarchies. The reputation of a player is malleable and comes into being when another player has information about the strategy that the first one has employed with other players. Reputations give rise to a variety of phenomena. including incentives to establish a reputation as a bully, and incentives to deter others from being bullies. Regulation is a relationship between a government and the governed. Governments cannot rule only through deterrence, but must instead achieve the voluntary compliance of the majority of the governed. Therefore regulation gives rise to the problems of just how stringent the rules and the enforcement procedures should be. Finally, territoriality occurs when players interact with their neighbors rather than with just anyone. It can give rise to fascinating patterns of behavior as strategies spread through a population.

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.

Just as important as getting cooperation started were the conditions that allowed it to be sustainable. The strategies that could sustain mutual cooperation were the ones which were provocable.