Multiple equilibria refer to situations in which an economic model or system can rest at different equilibrium points under the same external conditions. This phenomenon often arises in systems with non-linear dynamics or strategic interactions, leading to potential unpredictability and path dependence in outcomes.

Multiple Equilibria

Multiple equilibria

economic model

Equilibrium points are states in a dynamic system where all forces are balanced, and the system experiences no net change. They are critical in understanding system stability and behavior over time, as small perturbations can either return the system to equilibrium or lead to significant deviations.

equilibrium points

External conditions refer to the environmental, social, and economic factors that influence an individual's or organization's decision-making and performance. Understanding these conditions is crucial for adapting strategies and achieving desired outcomes in a dynamic and interconnected world.

external conditions

Non-linear dynamics is the study of systems where the output is not directly proportional to the input, often leading to complex and unpredictable behavior. It is crucial in understanding phenomena in various fields such as physics, biology, and economics, where small changes can lead to significant consequences.

non-linear dynamics

Strategic interactions occur when the outcome for each participant depends not only on their own actions but also on the actions of others, requiring anticipation and adaptation to others' strategies. These interactions are central to game theory and are crucial in economics, political science, and any field where decision-making entities influence each other.

strategic interactions

potential unpredictability

Path dependence is the idea that historical events or decisions significantly shape the trajectory of future developments, making certain outcomes more likely due to the influence of past choices. It highlights how initial conditions and early events can lock systems into specific paths, often leading to inefficiencies or suboptimal outcomes that persist over time.

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