Modeling alliance activity : an iterated prisoner's dilemma with exit option
By: AREND, Richard J
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Contributor(s): SEALE, Darryl A.
Material type: 
ArticlePublisher: UK : Wiley, nov. 2005Subject(s): Administração de Empresas | Modelo de Gestão | CooperaçãoStrategic Management Journal 26, 11, p. 1057 - 1074Abstract: We present and solve a new more accurate model of behavior within alliance activity. The model is essentially an iterated prisoner's dilemma with an exit option in each stage of the alliance. The proposed solution results in each partner receiving its opportunity cost as its expected average pay-off in the alliance. Managerial implications include: identification of where to focus efforts to improve alliance cooperation and performance; and an explanation for why more sophisticated partnership strategies than tit-for-tat are likely to be superior in this game.
We present and solve a new more accurate model of behavior within alliance activity. The model is essentially an iterated prisoner's dilemma with an exit option in each stage of the alliance. The proposed solution results in each partner receiving its opportunity cost as its expected average pay-off in the alliance. Managerial implications include: identification of where to focus efforts to improve alliance cooperation and performance; and an explanation for why more sophisticated partnership strategies than tit-for-tat are likely to be superior in this game.
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