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Social networks with positive and negative links often split into two antagonistic factions. Examples of such a split abound: revolutionaries versus an old regime, Republicans versus Democrats, Axis versus Allies during the second world war, or the Western versus the Eastern bloc during the Cold War. Although this structure, known as social balance, is well understood, it is not clear how such factions emerge. An earlier model could explain the formation of such factions if reputations were assumed to be symmetric. We show this is not the case for non-symmetric reputations, and propose an alternative model which (almost) always leads to social balance, thereby explaining the tendency of social networks to split into two factions. In addition, the alternative model may lead to cooperation when faced with defectors, contrary to the earlier model. The difference between the two models may be understood in terms of the underlying gossiping mechanism: whereas the earlier model assumed that an individual adjusts his opinion about somebody by gossiping about that person with everybody in the network, we assume instead that the individual gossips with that person about everybody. It turns out that the alternative model is able to lead to cooperative behaviour, unlike the previous model.