Introduction to Path Dependencies

Last Updated on 28. April 2023 by Martin Schuster

Path dependency is a concept that describes processes with a path-like trajectory. Those paths have a starting point and intersections with alternative routes. A small influence at the starting point or an intersection can have a massive impact on future development. The then chosen path is enforced by positive feedback making it hard to leave it, even if it turns out to be the less efficient choice.

Path dependencies can also be explained by positive network and bandwagon effects.

Example – Standard-Pólya-Process

Suppose we have an urn with a blue and a red ball. A player blindly draws a ball (e. g., blue) and puts it back to the urn. Another ball of the same color as the previously drawn ball is added in the next round. Thus, we now have two blue balls and one red ball in the urn. The likelihood of drawing a blue ball is now 2/3 making it more likely to draw a blue ball. This can be interpreted as a positive feedback loop.