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Law, Economics and Evolutionary Theory

Law, Economics and Evolutionary Theory

Edited by Peer Zumbansen and Gralf-Peter Calliess

Law and economics has arguably become one of the most influential theories in contemporary legal theory and adjudication. The essays in this volume, authored by both legal scholars and economists, constitute lively and critical engagements between law and economics and new institutional economics from the perspectives of legal and evolutionary theory. The result is a fresh look at core concepts in law and economics – such as ‘institutions’, ‘institutional change’ and ‘market failure‘ – that offer new perspectives on the relationship between economic and legal governance.

Chapter 4: Path Dependence: A Foundational Concept for Historical Social Science

Paul A. David

Subjects: economics and finance, evolutionary economics, law and economics, law - academic, law and economics


Paul A. David1 1. PATH DEPENDENCE: WHEN ‘HISTORY MATTERS’ ‘Path dependence’ is an important concept for social scientists engaged in studying processes of change, as it is for students of dynamic phenomena in nature. A dynamic process whose evolution is governed by its own history is ‘path dependent’. The concept, thus, is very general in its scope, referring equally to developmental sequences (whether in evolutionary biology or physics) and social dynamics (involving social interactions among economic or political agents) that are characterized by positive feedbacks and self-reinforcing dynamics. Although the assertion that ‘history matters’ has come to be coupled frequently with references to the concept of path dependence, the precise meaning of the latter term – and hence the significance of the former expression – more often than not remains rather cloudy. This is unnecessary as well as unfortunate. The fundamental idea is straightforward enough to be intuitively grasped without any instruction in economics; indeed, a thorough training in modern economics actually might interfere with human intuitions about history, and especially about processes involving historically contingent evolution. Even the formalizations of the concept of path dependence (to be introduced subsequently) are far from forbidding and readily will repay the effort spent in absorbing them. They will be seen to lend a useful measure of precision to descriptions of the special class of dynamical systems that are neither completely deterministic nor purely random in 1 The general shape of this chapter took form as the Invited Lecture presented to the Symposium on Twenty...

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