The Nash equilibrium is the limiting case in which a system's capacity to observe its own coordination dynamics has been set to zero. This paper introduces observation capacity (κ) as a continuous control parameter and proves that the Nash equilibrium is its zero-κ special case, subsuming classical game theory as a boundary condition of a broader cooperation theory. The framework decomposes κ into trust-based and enforcement-based components with coupled dynamics, revealing a border-collision bifurcation that annihilates the cooperative equilibrium without classical early warning signals. Six falsifiable predictions with specified measurement protocols are derived. Second paper in a series; the first formalized detection of locally aligned, globally extractive dynamics (DOI: 10.5281/zenodo.18804235).
Michael Thorne Kelly (Fri,) studied this question.