5. Bridge between Micro Behavioral Dynamics and Macro Structural Outcomes
RZE connects individual interaction patterns to system-level behaviors such as organizational breakdown, social trust collapse, or collective action success. It allows scalable simulation using agent-based modeling and can integrate with AI/ML systems for adaptive feedback in economic ecosystems.
Summary
In essence, RZE offers a novel formal grammar for economic relationships, capable of capturing:
Dynamic trust evolution
Ambiguity and deception
Memory and long-term interest
Adaptive transitions between cooperation and conflict
Thus, RZE complements and extends existing Nobel-winning frameworks (e.g., Nash equilibrium, behavioral economics, Ostrom's commons) by providing the missing layer of dynamic relational intelligence within economic theory.
CHAPTER 2. Literature Review
A. Classical Game Theory and Its Extensions (Nash, Axelrod, Aumann)
Classical game theory has profoundly shaped modern economic thought, particularly through the contributions of John Nash, Robert Axelrod, and Robert Aumann. Each contributed distinct conceptual tools for understanding rationality, cooperation, and strategy within economic and social interactions. However, despite their monumental influence, limitations remain when these models are applied to real-world relational dynamics characterized by ambiguity, memory, and evolving trust. The Relational Zone Economics (RZE) framework builds upon and addresses these limitations.
1. John Nash (Nash Equilibrium)
Nash's formalization of the equilibrium concept in non-cooperative games (1950) enabled economists to predict the outcome of strategic interactions under the assumption of complete rationality and common knowledge. The Nash Equilibrium (NE) posits that each player selects a strategy such that no player has an incentive to deviate unilaterally.
Limitations for relational modeling:
