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RC Example, Passage #1 Path Dependence


This is the first of the example lessons for reading comprehension. So in this video we're gonna present the first passage. We'll begin by reading through the passage. So I will say pause the video right now, and read the entire passage on your own. You'll find it below the video here. And then once you read it, restart the video and then we'll work through the passage together.

Okay, now that you've read the passage, we'll go through it together and I'll give you my thoughts. And I'll point out as I'm reading, I'm going to be pausing and talking and giving analysis. Now, of course, you're not gonna do this as you're actually reading the passage on the test.

But I'm doing this so that you can get a sense of my thought process and how I'm organizing the information as I move through it, because that's what you should be doing as you read reading comprehension. As you're working through, you're thinking actively about it, organizing the information, and making decisions as you move through. So, to begin, in economics the idea path dependence centers around the basic idea that the past affects the future.

And that the continued use of a product or practice despite newer or more efficient options can be explained by the preference to continue upon an already established path. Okay, so that's interesting. In other words, it seems that there's a certain amount of inertia that if you start doing one thing then it may be that the market will just continue that one choice.

Even if other choices become available, they'll still continue that one choice from inertia. The theory of path independence proposes that timing and sequence matter, that economic processes have multiple paths of outcomes rather than one unique path, and that a minor or fleeting example can have important and irreversible influences on the market allocation of resources.

So very interesting, the way that is gets set up in the beginning. In other words, there might be several different ways to do it but product B becomes the one that's successful. Product A and product C are not successful, and once product B is successful and it gains momentum then that's the one that people use, that becomes the standard.

And even if new products arise, even if it was just kind of a coincidence at that time that one thing beat out the other, then it gets a kind of momentum and it keeps on going with that momentum. So we'll keep on reading. The most well known example of path dependence is the use of the QWERTY keyboard which originated with the early typewriter, which has endured despite question whether it is suboptimal and inefficient.

So the QWERTY keyboard of course is the standard keyboard that you see on your computer and this was introduced for typewriters and it is interesting that this is something introduced For typewriter technology which was totally mechanical. So there were mechanical typewriters, then there were electric typewriters much later on and now we have computers.

And computers have essentially the same keyboard layout as the first mechanical typewriter. So that's just interesting to notice, okay. So we're talking about this idea of path dependence, that's the big idea, and we got this example of the QWERTY keyboard. Paragraph two.

Some researchers, such as James Mahoney, contend that path independent is specifically linked to contingent occurrences. Notice that word contingent is in quotes, so they're gonna define this for us. Contingent occurrences, occurrences that cannot be explained on the basis of prior events or historical conditions and thus have an element of the unpredictable, the unintentional, and the truly random.

So in other words, that's what contingent means. And so looks like they're gonna be using this word, so we have to remember, that's what it means. Not dependent on prior events, looks unpredictable, unintentional, arose by chance, okay. So Mahoney explains that path dependence can be thought of as a sequence that starts with this contingent first step, that could lead in multiple directions, but once the sequence begin, then there is an accumulated resistance to reverting to one of the other possible directions.

Again, the example, once the QWERTY keyboard was in use it became the standard and other configurations were less likely to be used. Other researchers have argued that these contingent events are necessary to distinguish path dependence from other mechanisms, such as adoptive expectations in which people base their expectations about what will happen in the future based on what has happened in the past.

So that's interesting. So in other words, we're looking at a complex pattern here, and there are multiple explanations for it and so we wanna be very clear why would it be that path dependence is the right explanation. And James Mahoney is saying that this idea of contingent events, that there is this first event, no particular reason for it, it just arouse by chance, but that was the event that people followed.

That that sets the path and that's really what defines path dependence. Very interesting. Notice also very interesting, the example of the QWERTY keyboard appeared again in this paragraph. Moving on to the third paragraph. Economist Douglass North has put forth that the path should be considered a dynamic process, not limited to starting contingent events but a complex branching process with multiple contingent events along the way that provide viable alternatives.

So very interesting. This is disagreeing in a way. It's not completely disagreeing, but it's saying it's not just dependent on a starting contingent event, a starting chance event. But there could be chance events and any points along the way, and you could get all kinds of different branches.

You can branch in one direction or another at various points during the development. So this seems to suggest that there's slightly less momentum to the path independent. It seems like Douglass North is saying that it's not just one starting event, and then that has momentum and then it just goes, goes indefinitely. He says no, there are several choice points, so it is a very different view.

Now we get again the analysis applied to an example. As with the example of the QWERTY keyboard, there were other opportunities to adopt other designs such as the Dvorak Simplified Keyboard, introduced in the early 1900s with a design that claims to reduce errors and increase efficiency. But which never became popular despite the fact that most computer operating systems offer an option allowing the user to switch to Dvorak layout.

Some argue that alternatives such as the Dvorak are not more optimal, as has been claimed, and that while the original use of the QWERTY keyboard might have been the critical juncture for setting the path, it might not necessarily be limited by contingency. So in other words, even though it is totally by chance that that design got the head start and got established, it seems to be it may be that it's just competing well against other options.

And no other option is clearly superior to it and so there's no reason to change. And so this is a little bit of a different view. This is saying that the reason that we're using the QWERTY keyboard now is not so much just the pure inertia. They made this choice over 100 years ago and we're just stuck with this choice but that they're actually have been other choice points along the way and really nothing better has come along.

So it's a very different kind of view. Notice incidentally, very important, the example of the QWERTY keyboard appears in all three paragraphs. Sometimes that happens, sometimes when they're discussing an abstract idea, they'll use the same example in all three paragraphs. But it's really important to understand the purpose of this passage is not, is not to discuss the QWERTY keyboard.

The QWERTY keyboard is purely in illustrative example. The purpose of this passage is to explore the idea of path independence. And is path independence a valid explanation for phenomena such as the QWERTY keyboard? So now that we've explored the whole passage, we'll look at the next two videos which will discuss questions about this passage.

And we'll talk about how to attack these questions.

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