I have heard of the phrase "The Circle Game" used in reference to Phish and their style of improvisation and extended jams.
How does this work, and is it evident in their live performance?
In The Phish Book, band members explain that their improvisation was based on what they called "The Circle Game." Band members would face each other and one band member would start a riff. Each band member would then experiment and add to the riff until they all thought that they were locked on the riff and that the riff had been taken as far as it could. Then the next band member would start a new riff and the process would repeat, moving around the circle.
Once you know the Circle Game, you hear it in practically every extended solo that Phish takes. All the group solos in A Live One are based on this principle. It's a very compact but powerful rule which enables the band to easily jam for extended periods of time but still remain fresh.