Hysteresis

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Related to Hysteresis effect: Hysteresis loss

Hysteresis

Used to characterize a lagging effect. Firms may fail to enter markets that appear attractive, or firms that are once invested in a market may persist in operating at a loss. The effect is characteristic of investments with high entry and exit costs along with high uncertainty.

Hysteresis

In economics, a situation or indicator that persists despite evidence that it should not. For example, the unemployment rate tends to remain high even after GDP growth has resumed, in part because business owners are afraid that growth will turn negative again even if they have no rational reason for believing so. One may think of hysteresis as an economy's collective memory. See also: Lagging indicator.
References in periodicals archive ?
In particular, the literature on hysteresis argues that some environmental and organizational factors induce the hysteresis effect and thus retard MNCs' divestment decisions.
The hysteresis effect accounted into the simulation is seen to have an effect with this graph.
Hysteresis effect was noticed at all temperatures investigated.
Instead, their recent revisions of their projections for the next decade implicitly incorporate very substantial hysteresis effects.
As previous tests of the cusp catastrophe model have shown that hysteresis effects only occur at high levels of physiological arousal (cf.
An investigation of air traffic control (ATC) operational errors showed that a high proportion of near misses occurred after a period of sustained high workload, suggesting that the hysteresis effect may have been a strong contributor (East, 1993; Smolensky, 1990).
III is expanded with employment changes the insider hysteresis effect is still insignificant.
The 1981-82 recession resulted in a general rise in the replacement rate, again pushing up the NAIRU via hysteresis effects (see below).
In addition, the authors assume that current output levels can have an effect on future potential output, and thus on actual future output during supply-determined times--a hysteresis effect.
In both cases, the size of the hysteresis effect decreases with increasing temperature.
In this article we were able to show that this problem could be formalised in a fairly straightforward manner, enabling us to obtain a formal representation of the hysteresis effect on the FEER.
We can see that this hysteresis effect depends entirely on the direction of movement of the triple line and thus the overall effect is rather similar to the static hysteresis of rubber adhesion in which apparent adhesion is directly related to the direction of motion of the "crack front.