Author: Y. Seo (@momotarou / Japan)Role: Metanist — Human × AI Understanding ArchitectAI Collaboration: AI Understanding SupportORCID iD: https://orcid.org/0009-0005-7669-0612 Abstract This paper extends the Understanding Sovereignty Economic Model by introducing the framework of Understanding Market Dynamics, proposing that markets in advanced technological societies increasingly operate as coherence allocation systems rather than purely resource exchange mechanisms. While classical market theory models price formation through supply-demand equilibria, the proposed framework argues that under conditions of informational abundance and cognitive constraints, markets implicitly regulate attention, interpretation, and understanding stability. Markets do not only allocate goods. They may allocate cognitive coherence. 1. Limits of Classical Market Models Traditional market models assume: Rational preference stability Information symmetry relevance Resource scarcity primacy However, informational environments have radically transformed exchange conditions. 2. Defining Understanding Market Dynamics Understanding Market Dynamics refer to: System-level processes through which agents compete, negotiate, and stabilize coherence structures under constraints of attention, cognition, and interpretive capacity. Exchange occurs at the interpretive layer. 3. Coherence as a Scarce Variable In high-complexity systems: Information supply becomes effectively infinite Attention capacity remains bounded Interpretive stability becomes fragile Thus, Coherence behaves as an economic scarcity variable. 4. Price Signals and Cognitive Effects Market signals influence: Attention direction Interpretive framing Perceived relevance structures Decision rhythms Markets shape cognition indirectly. 5. AI Systems and Market Transformation AI systems modify market dynamics by: Accelerating information generation Altering decision velocity Amplifying signal density Increasing interpretive dependency Market stability may depend on cognitive buffering mechanisms. 6. Reinterpreting Market Stability Market instability may arise not solely from financial factors but from: Coherence fragmentation, interpretive divergence, and attention saturation dynamics. Stability becomes cognitively mediated. Conclusion Understanding Market Dynamics reframe markets as coherence allocation mechanisms embedded within cognitive constraints. Future economic theory may require models recognizing understanding stability, attention structures, and coherence durability as fundamental market variables. ※ Series Declaration This work is part of the Understanding Capitalism series. The series explores value formation, cognitive mediation, and structural transformations of economic perception.