4. Illustrative Results
A. Escalation Pathways:
Nash Model predicts mutual tariff imposition as equilibrium due to zero incentive for unilateral de-escalation.
TFT allows early cooperation but quickly degenerates to infinite retaliation cycles following a single misstep.
RZE shows how zones degrade from Green Yellow Red after repeated signaling failures, with opportunities for repair if Jernih actors intervene or credible long-term interests align.
B. Spillover Effects:
In RZE, betrayal in the technology sector results in zone contagion---Red zones in agriculture and energy---due to perceived strategic intent.
Classical models fail to simulate such sectoral spillover unless explicitly programmed.
C. Memory and Recovery:
RZE agents show zone memory, allowing trust to rebuild over time or with compensatory gestures.
TFT lacks forgiveness; Nash doesn't model time or memory at all.
5. Analytical Insights
a. Time-Sensitive Rationality:
RZE incorporates memory and dynamic interests, revealing how actors deviate from static rationality when anticipating future zone movements.
b. Strategic Ambiguity Handling:
While TFT responds mechanically to signals, RZE models the role of interpretive zones like Yellow, which offer space for ambiguity resolution without immediate retaliation.
c. Meta-Stability of Cooperation:
Nash cooperation is brittle under slight perturbations. RZE allows for resilient cooperation where long-term orientation (Jernih) stabilizes interactions despite short-term shocks.
d. Zone-Reversal Possibility:
Only RZE models permit genuine conflict transformation, e.g., Red-to-Green transitions mediated through third parties or narrative shifts---absent in classical models.
6. Policy Relevance of Comparative Advantage
Trade policymakers relying on classical models may underestimate long-term damage of short-term protectionism.
RZE suggests that symbolic trust restoration (e.g., joint forums, knowledge-sharing) can be more effective than reciprocal tariff reductions in restoring cooperation.
Predictive simulations based on RZE can aid ministries in strategic sequencing of negotiations to prevent conflict spirals and design relational repair strategies.
7. Limitations and Future Work
RZE complexity may hinder real-time policy application without proper computational infrastructure.
Further comparative work is needed using empirical calibration with trade data (e.g., WTO disputes or OECD investment flows).
Integration with machine learning for real-time zone inference could expand RZE's practical applicability.
CHAPTER 6. Empirical Implications
A. Validation in Human Resources, Microeconomics, and Political Economy
The Relational Zone Economics (RZE) framework---through its incorporation of dynamic memory, strategic ambiguity, and long-term relational positioning---invites a wide range of empirical validations beyond theoretical simulation. This section outlines three primary empirical domains where RZE's predictions diverge from classical economic models and where measurable data can be used to validate its claims.
