Ventana software support forum

In "Re: SD Success (SD0173)" Jack Homer sent the following:

>Speaking of "Success to the Successful", I recommend to all systems thinkers
>a nifty little article in this weekends (May 5) New York Times Magazine,
>"Why the Best Doesnt Always Win," by Peter Passell. Passell describes the
>phenomenon of "path dependence", and gives a number of good examples going
>beyond the usual Betamax/VHS story. He also gets into some of the public
>policy issues that path dependence raises, and describes the failure of
>traditional economics to explain the sometime success of inferior
>technologies.


Thank you, Jack. I got the article and found it very interesting.
Especially the comment that path dependence is not taught in Econ. 101
because most economists are "tradition bound" and that "the technology of
economics itself is path dependent because economists have so much invested
elsewhere." As I understand it, economists tend to shun system dynamics
modeling because they are wedded to the use of econometric models, even
though using such models is like forecasting by looking in the rear view
mirror.

The article also notes that "free marketeers fear that path dependence will
become a rationale for bigger government -- and is thus the Devils work."
Sure enough, while surfing, I came across the Cato Institute web site
(http://www.cato.org/) and found the following:

"QWERTY, Windows, and the myth of path dependence.
One avant-garde excuse for retaining federal powers to intervene in the
economy is that certain inferior technologies that get to market first may
have such a lead over latecomers that better approaches will never have a
chance. That theory, which economists call "path dependence," provided the
rationale for the recent antitrust harassment of Microsoft. In their
article, "Policy and Path Dependence: From QWERTY to Windows 95," economists
Stan Liebowitz and Stephen Margolis demolish both the theoretical and the
empirical cases for path dependence. Neither the case of the QWERTY
typewriter keyboard nor that of the VHS tape system -- two examples
frequently cited -- holds up under analysis."

Demolish? It seems reasonable to me that the "Success to the Successful"
archetype produces the phenomenon of path dependence in systems that contain
this structure. Is this true? Is path dependence a myth or is political
philosophy overwhelming logic?

Bob Powell
scuba@usa.net

Bob Powell asked about Path Dependence:

This discussion reminded me of a book I read recently entitled "Turtles,
Termites, and Traffic Jams", by Mitchell Resnick, MIT Press. In this
book--which is about simulation studies using massively parallel
microworlds--one of the lessons is that complex behavior can arise from
very simple structures. Resnick has a brief positive discussion of system
dynamics and spends most of the time on the case examples. If you can get
the book, read the section on ants. It describes how ants develop paths
to food as they find it and provides a very good discussion of how
reinforcing feedback can develop a "path". The model is easy to apply to
other areas.

Regards,

Sam Israelit
(617) 330-4102
sam.b.israelit@arthurandersen.com

Bob Powell asks about the CATO institutes research on path dependence:

"Is path dependence a myth or is political
philosophy overwhelming logic?"

The latter.

CATO is a partisan advocacy group, and the research they commission is
designed to demonstrate a preselected point. Of course, this is the
modus operandi of many so-called research groups, on the left as well as
the right.

It is important to be clear that the fact that CATO knew the answer
before they did their research does not automatically mean their
arguments are wrong.

However, in the case of path dependence, they are wrong. Positive loops
arising from positive network externalities (the fancy name for the
success to the successful archetype as applied to these contexts) are
extremely common, and there are many well-documented examples. A basic
example is language: There is a strong benefit to a person of being
able to speak the language of the society in which they live, and so
(also through the positive feedback of being born into a family and
culture which speaks a certain language), languages spoken by the
dominant group in a region will gain further advantage, while those of
the minorities will wither. Increasingly global communications have
given the dominant language in the west, English, a decided boost, while
the languages of small indigenous groups such as native Americans become
extinct at a rapid rate (even when the members of those groups do not
become extinct themselves). If language were examined from an antitrust
position, we would observe that over the centuries the concentration
ratio of the language market has increased markedly (the market share
of the already popular languages is growing; that of the small ones
shrinking). This does not of course mean that we need government
regulation to preserve ancient languages (any such would likely to
ineffective anyway, as we are quite far down the path toward linguistic
lock in: sic transit gloria).

It is interesting, however, that the archetypal example of technological
lock-in, QWERTY, is now hotly debated. Several ergonomic studies claim
that qwerty is not slower than e.g. the dvorak layout, although i
believe the world champion typist uses dvorak, and it is easier to
learn. There isnt any doubt that we are locked in to qwerty by
positive feedback: the debate is over whether qwerty is in fact inferior
to the alternatives.

Path dependence arising from positive feedbacks is rarely the only
dynamic operating in a system. As usual, it is dangerous to assume that
an archetype such as success to the successful is a sufficient model
of a system.

John Sterman
jsterman@mit.edu