AbdulAlhazred
Legend
Remember, this kind of play is often pretty heavily centered on understanding the character in the context of the fiction, discovery of character. Usually certain things are established initially, such as perhaps a love interest in order to have a place to start from.What I've found is that if you're both playing to find out what happens. Then fiat is fine as long as it's seen as living world + choice the person is making in response to you. You need to be on the same page that this is something that can actually go either way. If the GM or Player for that matter, treats their characters as these immovable fanatics that can never be swayed. Then you're probably on different pages as to the purpose of play.
And I think this is fundamentally where the difference is with trad play. In trad play it's perfectly acceptable to start with a blank slate. Your main goal is to explore, and then possibly elaborate on or alter, some pre-existing fiction.
Honestly, I have seen plenty of cases of backstory and player invented goals used by GMs in trad play to build on. I have only seen one GM do that to really explore character in a deep way. Maybe two, and those are some really extra talented ones!