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The Analysis of Dynamic Three-Stage Game Based on Standards Lifecycle
Abstract
Based on existing standard dynamic game model of negotiation and bandwagon mechanism, this paper reconstructs a three-stage dynamic game model of standard lifecycle for formation, implement, and diffusion by widening the condition of players of existing model; it attest to the consistency of conclusions for equilibrium condition of standard adoption by comparing new game model with old one, which not only relies on the coordination mechanism used by the players, but also on the relative value they attach to successful coordination, and on the formal standard's performance at the end of the game.
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The paper focuses on the various frameworks that have been advanced for socio-economic analysis of compatibility standards in information systems, and their adequacy in addressing a set of key issues and challenges. The paper draws upon the concepts developed within the social shaping of technology perspective to approach the standardization process in a dynamic fashion. A dynamic approach to the analysis of standards development is proposed which examines together the settings of standard development and use. The analysis addresses the entire life cycle of a standard, which is conceived in terms of a series of versions of a particular standard, and the displacement of one standard by another. These issues are explored empirically through the case study of healthcare messaging standards in the English and Scottish healthcare sectors.
Formal standards arise out of deliberations of standards-writing organizations, while de facto standards result from unfettered market processes. Therefore, the former are of a higher quality and legitimacy but are slower to develop than the latter. To address this trade-off, we analyze a dynamic game where two players choose between one evolving formal standard and one mature de facto standard. The outcome of the game relies on the coordination mechanism used by the players on the relative value they attach to successful coordination and on the formal standard's performance at the end of the game.
We discuss three common mechanisms for achieving coordination, with particular reference to the choice of compatibility standards. The first involves explicit communication and negotiation before irrevocable choices are made: It represents what standardization committees do. The second mechanism, by contrast, involves no explicit communication and depends on unilateral irrevocable choices: It succeeds if one agent chooses first and the other(s) follow(s). This is a simple version of "market leadership." We analyze these two mechanisms in a simple model and show that the committee is more likely to achieve coordination. Moreover, although the committee is slower, it outperforms the market mechanism, even when we allow for the value of speed. Third, we examine a hybrid of the first two mechanisms, in which both communication and unilateral preemptive actions are allowed. We show that, far from worsening its performance, unilateral actions improve the committee system. This hybrid system more closely resembles the committee system, the more important coordination is relative to conflict.
In the late 1980s, traditional standards development organisations (SDOs) were moving toward creating anticipatory standards as a way of coping with the fast growth in new technology in the computing industry. The development of anticipatory standards (standards developed ahead of the technology) was seen as a possible way for the formal standards bodies to keep abreast of these rapid changes. By creating standards ahead of the technology, the standards would act as “change agents” and guide the market. Anticipatory standards were seen as one way of addressing the problem of arriving at suboptimal de facto standards. If the industry can be guided before the technology develops, this will encourage the use of optimal products. This paper considers the diffusion pattern of the ISO/IEC Information Resource Dictionary System (IRDS) Framework standard that fits into the category of an anticipatory standard. Comparisons are made between the diffusion patterns of the ISO/IEC IRDS standard and the ISO/IEC Open Standards Interconnection (OSI) Reference Model as they were both anticipatory in nature, both framework/reference standards, both originated at approximately the same time and were both developed in traditional standards development organisations.
Standards-related literature within business-to-business (B2B) covers many separate areas. Examples are enabling technology,
development processes for standards in formal, semi-formal and informal fora, base standards (XML and EDI) extensions and
evolvement, intellectual property rights, etc, etc. In computer science literature, the term life cycle is usually used to
denote the previously mentioned phases for a product or process, from ”birth to death”. They are useful for understanding
various phenomena and how these relate to their respective environments such as to stakeholders. However, the standards life
cycles is only rarely discussed in literature. This paper examines seven existing life cycle models for standards and standardisation,
and shows where extensions to the current approaches are needed. The result is a general standards life cycle model, which
may serve as the basis for discussion and to identify perspectives for both standards research and standards practice to consider.
This paper discusses firm behavior, market performance, and the public and private institutions that arise in systems markets, i.e., markets where consumers use compatible components together to generate benefits. In such markets, which include communications networks and 'hardware/software' networks, popular products are inherently more valuable. These 'network effects' can drive corporate strategies and are critical in understanding innovation in many high-technology markets. The discussion here emphasizes the dynamics of consumer adoption decisions in the presence of network effects, competition between incompatible systems, and how suppliers choose which components are compatible and which are not. Copyright 1994 by American Economic Association.
The standardization landscape in the information and communication technology industries is fragmented in many different standardization bodies, industry consortia, and alliances. The existence of competing standardization coalitions may prevent coordination on a common standard. There is a lot of debate among practitioners and analysts about whether this fragmentation creates a coordination failure. Competition between standardization coalitions may harm compatibility. It also helps to mitigate coordination failures that occur within industry-wide standardization bodies and coalitions. The negotiation process in a coalition can cause coordination failures of its own. Technology sponsors may insist on their preferred technology being accepted as standard. Their intransigence slows down the selection of a standard. Introducing competition between coalitions can speed up negotiations within them, and thus help to overcome this infra-committee coordination failure. A game theoretic model formalises this view. It explores the effect of competition between coalitions on the speed of decision-making and standardization. It finds that a fear for incompatibility may hold back competing committees to the point that a grand coalition may actually adopt a standard faster than competing committees would. This result debunks sweeping statements that industry-wide coalitions or standards bodies are necessarily slow compared to strategic alliances and consortia.
Life cycle theory from product to standards
- Li Baohong
- Lu Tingjie