CZiZj=(Ii(t)Ij(t),Mij,)C_{Z_i \rightarrow Z_j} = \delta(\|I_i(t) - I_j(t)\|, \Delta M_{ij}, \phi)
where:
\delta: transition cost function
IiIj\|I_i - I_j\|: interest misalignment norm
Mij\Delta M_{ij}: memory deviation (trust erosion or reinforcement)
\phi: structural friction coefficient (e.g., norms, institutions, media amplification)
This cost structure enables path-dependency and irreversibility---for example, a transition from Green to Black may require much higher effort to return than vice versa, echoing behavioral hysteresis and real-world economic alienation.
4. Implications for Strategy Design
In the RZE framework, strategies are no longer defined merely by action sets and payoffs, but by zone navigation, interest modulation, and memory shaping. This enables modeling of:
Cooperative sabotage (e.g., firms in cartel agreements feigning competition in public)
Delayed betrayal (e.g., exploitative venture capital structuring)
Moral long-game strategies (e.g., impact investing with Clear Zone horizon)
Conflict as leverage (e.g., political-economic brinkmanship in the Red Zone)
Such behavior lies outside the explanatory scope of standard game theory, while RZE internalizes it via a richer, more flexible strategic grammar.
Conclusion
By positioning interest dynamics and relational zones as co-evolving strategic parameters, RZE bridges the gap between bounded rationality, dynamic interaction modeling, and socio-institutional complexity. It equips economists and policymakers with tools not just to predict choices, but to understand the deeper narrative arcs that shape trust, betrayal, cooperation, and transformation in real-world economies.
C. Mapping Zones in Markets, Investment, and Governance
The Relational Zone Economics (RZE) framework offers a novel lens to classify and interpret economic interactions not just by price or contract structures, but by the relational quality and dynamic trajectory between agents. Through the six-color zone model---White, Green, Yellow, Red, Black, Clear---we construct a semantic-analytical system that allows researchers and policymakers to identify structural patterns of behavior, latent tensions, and emergent cooperation or failure across domains of markets, investment ecosystems, and governance regimes.
1. Market Dynamics and Relational Zones
