TY - JOUR
T1 - A behavioral model of path dependency
T2 - The economics of profitable inefficiency and market failure
AU - Altman, Morris
PY - 2000
Y1 - 2000
N2 - In this article, a model of path dependency is developed, grounded in behavioral economics (x-efficiency/efficiency wage theory), where it becomes possible and reasonable to expect a multiplicity of equilibrium solutions to identical economic problems and for the dominant solution to be sub-optimal and inefficient. Unlike in the pioneering work on path dependency by Paul David and Brian Arthur, the sup-optimal outcomes generated in this model do not provide economic agents with exploitable economic opportunities in the context of their particular objective functions. Such opportunities constitute, from the perspective of the conventional wisdom, the Achilles Heel of their work.
AB - In this article, a model of path dependency is developed, grounded in behavioral economics (x-efficiency/efficiency wage theory), where it becomes possible and reasonable to expect a multiplicity of equilibrium solutions to identical economic problems and for the dominant solution to be sub-optimal and inefficient. Unlike in the pioneering work on path dependency by Paul David and Brian Arthur, the sup-optimal outcomes generated in this model do not provide economic agents with exploitable economic opportunities in the context of their particular objective functions. Such opportunities constitute, from the perspective of the conventional wisdom, the Achilles Heel of their work.
KW - Efficiency wages
KW - Market failure
KW - Path dependency
KW - X-inefficiency
UR - http://www.scopus.com/inward/record.url?scp=0009018594&partnerID=8YFLogxK
U2 - 10.1016/S1053-5357(00)00057-3
DO - 10.1016/S1053-5357(00)00057-3
M3 - Article
AN - SCOPUS:0009018594
VL - 29
SP - 127
EP - 145
JO - Journal of Socio-Economics
JF - Journal of Socio-Economics
SN - 1053-5357
IS - 2
ER -