What is path dependence?

Path dependence means that outcomes are shaped by the route taken, not only by present conditions. Once a system has moved down a path, switching costs and reinforcing loops make it hard to change, even if a better option exists. It is a central idea in the study of technology adoption and institutions.

How it works

Increasing returns create path dependence. The more a standard is used, the more useful and cheaper it becomes, so more people adopt it. Early random events, such as who adopted first, can therefore decide which standard wins. After lock-in, the cost of changing is high, so the system stays where it is. This means that identical systems with different histories can end up in different places, and that forecasts need to reflect the possibility of many paths, not one average.

For planning, path dependence means that timing and early momentum can matter more than quality. It also means that an intervention is often much cheaper before lock-in than after, so the window for change is early.

Example

Say two payment formats, X and Y, each start with 50 users. Each new user picks the format with more users, with a small random chance of picking the other. By luck, the first 10 newcomers choose X, giving X 60 and Y 50. Now X is more attractive, and more choose X. After 1,000 users, X may hold 90 percent. In a different history with early Y luck, Y would win instead. This is an illustration with round numbers.

How to model it in Machinations

Use two Pools and a Gate that sends each new arrival to a Pool with a probability depending on the Pools' sizes, set by a Register and a state connection. Play many times at once and compare the final shares to see that the winner varies from Play to Play.