Old Habits Die Hard:Path Dependency and Behavioral Lock-in

An increasing number of scholars have begun to argue that market forces may not automatically select the best technologies or products. During the 1980s and 1990s, Paul David and Brian Arthur published several papers in which they asserted that sub-optimal or inefficient technologies can become locked in as industry standards, and, in instances where there are significant network effects, these inefficiencies may persist for extended periods of time. To help illustrate behavioral lock-in, this paper introduces summaries of three case studies that are currently being developed. Two provide examples of provider lock-in: the continued use by American physicians of paper rather than electronic medical records and the relatively slow diffusion of high performance work systems in the US. The third case examines the standardization of consumer taste for beer in America and how this development has altered the nature of competition in this market. All of these cases provide evidence that superior processes or alternative re not being fully embraced in the marketplace, a finding that funds counter to the expectations of traditional economic theory.