Path Dependence

The concept of path dependence has been popularized by economic historians and is now widely employed in economics, history, political science, sociology, and geography to describe systems and processes that are governed by their own history. More formally, a path-dependent system or process is characterized by nonergodicity, a term taken from the theory of stochastic systems. While an ergodic system or process will converge toward an invariant, asymptotic probability distribution regardless of its initial conditions, the asymptotic probability distribution of a nonergodic or path-dependent stochastic system evolves as a consequence of its own history. Path dependence is a label for a particular class of dynamic systems or processes, not a theory explaining how those systems behave. It is thus necessary to “develop theories and frame ...

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