Jessica Hammer, one of Clay's grad-students, has posted her thesis, "Six Principles: Toward a Theory of Interactive Narrative." The thesis is a series of essays, with examples, for building human/computer-hybrid interactive stories, and is fascinating:
Unfortunately, it is mathematically impossible for an author, or even any reasonably-sized team of authors, to create enough material to both provide the user with a large number of choices in the narrative and to provide them with many options each time they are faced with a choice. The author must choose between creating a large number of choice-points with only a few choices at each, or a few choice-points with many choices at each, or having many choice-points with many choices but having the narrative material at each be thin. This is because the number of lexia required grows exponentially with the number of choices in the story…
Having a computer author, on the other hand, can overcome these problems. Because the computer can generate material algorithmically, it can respond to the user's choices in real-time. Eventually, computer authorship may be a solution to creating responsive, interactive narratives. If a computer could be programmed to understand what makes a good story, and an algorithm could be devised for how to present that story, then the computer could create a powerful narrative to the user that would be completely fresh each time.