Intro to Mathematical Economics
Hysteresis refers to the phenomenon where the state of a system depends on its past states, causing a lag in response to changes in external conditions. This concept is crucial in understanding how systems can exhibit path dependence, meaning that the outcome can vary based on the trajectory taken, rather than solely on current conditions. In economics and other fields, hysteresis can explain why certain changes, such as economic shocks or policy shifts, may have long-lasting effects that are not easily reversed.
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