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The IAD framework helps to perceive complex collective action problems by dividing them into 'action arenas', that are smaller pieces of practically understandable function.<ref name="indiana" /> The analyst assumes that the structure of the action situation is fixed in the short-term. For an action situation to exist, there must be "actors in positions" (the number of possible roles that are available in this recurring interaction situation).<ref name="Understanding Institutional Diversity">{{cite book|url=http://press.princeton.edu/chapters/s8085.pdf|title=Understanding Institutional Diversity|author=Elinor Ostrom|date=2009|publisher=Princeton University Press|isbn=9781400831739|___location=Princeton|accessdate=30 January 2015}}</ref> Actors have choices within the existing (rule) structure. In the study of outcomes from collective choice situations, actors are influenced by the institutional arrangements, the socio-economic conditions, and the physical environment.<ref>{{cite journal|author1=Krister Andersson|title=Understanding decentralized forest governance: an application of the institutional analysis and development framework|url=http://sspp.proquest.com/archives/vol2iss1/0507-010.andersson.html|journal=Sustainability: Science, Practice, & Policy|accessdate=2 February 2015|archive-url=https://web.archive.org/web/20150905060853/http://sspp.proquest.com/archives/vol2iss1/0507-010.andersson.html|archive-date=5 September 2015|url-status=dead}}</ref> The institutional arrangements can be studied by seven rule types (as per below).<ref name="Understanding Institutional Diversity" />
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