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A lthough stocks and flows are both necessary and sufficient for generating dynamic behavior, they are not the only building blocks of dynamical systems. More precisely, the stocks and flows in real world systems are part of feedback loops, and the feedback loops are often joined together by nonlinear couplings that often cause counterintuitive behavior. From a system dynamics point of view, a system can be classified as either "open" or "closed." Open systems have outputs that respond to, but have no influence upon, their inputs. Closed systems, on the other hand, have outputs that both respond to, and influence, their inputs. Closed systems are thus aware of their own performance and influenced by their past behavior, while open systems are not . Of the two types of systems that exist in the world, the most prevalent and important, by far, are closed systems. As shown in Figure 1, the feedback path for a closed system includes, in sequence, a stock, information about the stock, and a decision rule that controls the change in the flow . Figure 1 is a direct extension of the simple stock and flow configuration shown previously with the exception that an information link added to close the feedback loop. In this case, an information link "transmits" information back to the flow variable about the state (or "level") of the stock variable. This information is used to make decisions on how to alter the flow setting.
Figure 1: Simple System Dynamics Stock-Flow-Feedback Loop Structure. It is important to note that the information about a system's state that is sent out by a stock is often delayed and/or distorted before it reaches the flow (which closes the loop and affects the stock). Figure 2, for example, shows a more sophisticated stock-flow-feedback loop structure in which information about the stock is delayed in a second stock, representing the decision maker's perception of the stock (i.e., Perceived_Stock_Level), before being passed on. The decision maker's perception is then modified by a bias to form his or her opinion of the stock (i.e., Opinion_Of_Stock_Level). Finally, the decision maker's opinion is compared to his or her desired level of the stock, which, in turn, influences the flow and alters the stock . Given the fundamental role of feedback in the control of closed systems then, an important rule in system dynamics modeling can be stated: Every feedback loop in a system dynamics model must contain at least one stock. .
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positive and negative feedback processes are often described via a simple technique known as causal loop diagramming. Negative feedback loops. Generally speaking.systemdynamics. negative feedback processes stabilize systems. they are responsible for the growth or decline of systems. or keeping a system at. Positive loops portray self-reinforcing processes wherein an action creates a result that generates more of the action. on the other hand. Causal loop diagrams are maps of cause and effect relationships between individual system variables that. form closed loops.htm Figure 2: More Sophisticated Stock-Flow-Feedback Loop Structure Positive and Negative Loops Closed systems are controlled by two types of feedback loops: positive loops and negative loops . Causal Loop Diagramming In the field of system dynamics modeling. Thus. describe goal-seeking processes that generate actions aimed at moving a system toward. Generally speaking.org/DL-IntroSysDyn/feed. 2 of 12 10/10/2010 7:19 PM . and hence more of the result. a desired state. although they can occasionally work to stabilize them .http://www. positive feedback processes destabilize systems and cause them to "run away" from their current position. when linked. Anything that can be described as a vicious or virtuous circle can be classified as a positive feedback process. although they can occasionally destabilize them by causing them to oscillate.
move in the opposite direction as Variable C). Figure 3: Generic causal loop diagram The overall polarity of a feedback loop -. Variable C would fall (i. whether the loop itself is positive or negative -. acts to stabilize the system -i. The rise in Variable A after the shock propagates around the loop.. move in the opposite direction as Variable B). To indicate a negative loop.org/DL-IntroSysDyn/feed. causal loop diagrams are drawn in a manner slightly different from those shown in Figure 3 and Figure 4. the letter "B" (for "Balancing"). In Figure 3 the loop is positive and defines a self reinforcing process. is indicated by a symbol in its center. More specifically. If an external shock were to make Variable A fall. the arrows that link each variable indicate places where a cause and effect relationship exists. or in the opposite direction (in the case of a minus sign) . Variable D would rise (i. Variable B would rise (i.e. a large minus sign indicates a negative loop.. ceteris paribus. move in the same direction as Variable B). the variable at the tail of each arrow in Figure 3 causes a change in the variable at the head of each arrow. in the same direction (in the case of a plus sign).that is.systemdynamics. Figure 4 presents a generic causal loop diagram of a negative feedback loop structure. For example... This can be seen by tracing through the effect of an imaginary external shock as it propagates around the loop. and Variable A would rise (i. if a shock were to suddenly raise Variable A in Figure 3.. Variable D would rise (i.. In the figure..http://www. By contrast. for example..e.in a causal loop diagram.e.e. the letter "C" (for "Counteracting"). Variable B would fall (i.e. More specifically.e. or an Figure 5: Alternative Causal Loop 3 of 12 10/10/2010 7:19 PM . To define the overall polarity of a loop system dynamicists often use the letter "R" (for "Reinforcing") or an icon of a snowball rolling down a hill to indicate a positive loop. move it back towards its state prior to the shock. Variable C would fall (i. The Figure 4: Generic causal loop diagram of a shock is thus counteracted by the system's response.. and Variable A would rise even further (i. A large plus sign indicates a positive loop. move in the opposite direction as Variable A). move in the opposite directionas Variable C). move in the opposite direction as Variable A). some system dynamicists prefer to place the letter "S" (for Same direction) instead of a plus sign at the head of an arrow that defines a positive relationship between two variables.e. move in the same direction as Variable D). negative feedback loop structure Occasionally.htm Figure 3. presents a generic causal loop diagram. while the plus or minus sign at the head of each arrow indicates the direction of causality between the variables when all the other variables (conceptually) remain constant. The letter "O" (for Opposite direction) is used instead of a minus sign at the head of an arrow to define a negative relationship between two variables. move in the same direction as Variable D).e.e.
e. the Elephant Population would increase.. Figure 7: Positive Loop Showing Growth in the National Debt Due to Compounding Interest Payments 4 of 12 10/10/2010 7:19 PM . In this same way.positive feedback.http://www. we can say that if . As these loops are shown in isolation (i. Positive Feedback Examples Population Growth/Decline: Figure 6 shows the feedback mechanism responsible for the growth of an elephant herd via births. Diagramming Conventions In order to make the notion of feedback a little more salient. Thus.over time .systemdynamics. an increase in the level of national debt will increase the amount of the interest paid each year. we say that if the birth rate of the herd were to increase.org/DL-IntroSysDyn/feed. First. disconnected from the other parts of the systems to which they belong). For a given elephant herd. the birth rate of the herd would increase.htm icon of a teetertotter is used . In this simple example we consider two system variables: Elephant Births and Elephant Population. Figure 6: Positive Loop Responsible for the Growth in an Elephant Herd via Births National Debt: Figure 7 is a positive loop that shows the growth in the national debt due to the compounding of interest payments. In this same way. the Elephant Birth rate drives the Elephant Population that drives Elephant Birth rate .the Elephant Population of the herd were to increase. their individual behaviors are not necessarily the same as the overall behaviors of the systems from which they are taken. Figure 6 to Figure 17 present a collection of positive and negative loops. Figure 5 illustrates these different causal loop diagramming conventions. we note that that an increase in the amount of interest paid per year on the national debt (itself a cost within the federal budget ) will cause the overall national debt to increase.
Thus. Country B's action. in turn. Country B interprets this as a threat and responds in-kind with its own increase in military capability. which further reduced the banking industry's capital reserves. As more banks failed. The relationship between the banking industry's health and the rate of bank failures is also negative. in turn. An overall economic downturn caused the rate of bank failures to increase. This caused even more banks to fail.org/DL-IntroSysDyn/feed. Country A moves to further increase its military capability. an "arms race" can be described as a self-sustaining competition for military superiority. This means that if the health of the banking industry increases. If Country A moves to increase its military capability. An arms race is driven by the perception that one's adversary has equal or greater military strength. we say that the two system variables "move" in the same (S) or positive (+) direction. From the diagram. 5 of 12 10/10/2010 7:19 PM . causes Country A to feel more threatened. In this case.http://www. we see that the frequency of bank failures increases public concern and the fear of losing their money.systemdynamics. In its simplest form. Figure 8: Arms Race is a Positive Feedback Process. The relationship Figure 9: Bank panic is a positive feedback process. This vicious cycle was clearly seen during the 1930s.htm Arms Race: Figure 8 shows a generic arms race between Country A and Country B. Figure 8 shows the feedback mechanism responsible for the spiraling decline of the banking system during this period. This means that if the rate of bank withdrawals increases. the health of the bank decreases as capital reserves are drawn down. The relationship between withdrawals and bank health is negative (-) or opposite (O). prompted many to withdraw their savings from banks. Bank Panic: A common scene during the Great Depression in the 1930s was that of a panic stricken crowd standing outside their local bank waiting to withdraw what remained of their savings. This. between the "fear of not being able to withdraw money" and the rate at which bank withdrawals are made is also positive. the public's fear of not being able to withdraw their own money increased. the number of bank failures per year will decrease.
e. An increase in the number of elephants in the herd means that a proportionally larger number of elephants will die each year.http://www. A plus sign indicates this complimentary behavior.org/DL-IntroSysDyn/feed. A negative sign indicates this counteracting behavior. reduces Hunger.htm Figure 10 depicts three interacting positive feedback loops that are thought to be responsible for the growth in students taking drugs in high school . These two relationships combine together to form a negative feedback loop. Now. the Elephant Population will decrease. The causal influence of Elephant Population to Elephant Death rate is just the opposite. If the Elephant Death rate increases. Figure 12 and Figure 13 are two simple and familiar examples of negative feedback processes. 6 of 12 10/10/2010 7:19 PM . Figure 12 shows the negative feedback process responsible for the dissipation of Itching due to Scratching. that is.systemdynamics. Figure 13 considers the negative feedback involved in Eating to reduce Hunger. Figure 11 shows the negative feedback process responsible for the decline of an elephant herd via deaths. Figure 10: Feedback structure responsible for growth high school drug use Negative Feedback Examples Population Growth/Decline:In Figure 6. Figure 11: Elephant population negative feedback loop. Increasing in the rate food consumption. An increase in one's Hunger causes a person to eat more food. in turn. the feedback structure between Elephant Population and Elephant Death rate. we saw how an elephant population and its corresponding birth rate form a positive feedback loop.. i. an increase in the herd's death rate. we consider the other half of the equation.
As the number of police officers increase. Figure 15: Gasoline consumption negative feedback Implicit and Explicit Goals The negative feedback loops presented in Figure 11 through Figure 15 are. A higher gasoline price pushes many individual motorists to join carpools. reduces gasoline consumption. more arrests are made and the number of drug dealers is reduced. for a substantial period 7 of 12 10/10/2010 7:19 PM . That is.systemdynamics. An increase in the number of drug dealers in a neighborhood will prompt local officials to increase the number of law enforcement persons as a counter measure.org/DL-IntroSysDyn/feed. misleading because the goals they are seeking are implicit rather than explicit.http://www. An increase in gasoline consumption increases gasoline price (supply reduction). in isolation.htm Figure 12: Scratching an itch and negative feedback Figure 13: Dissipation of hunger Law Enforcement:Figure 14 depicts a negative feedback process that maintains a balance between the number of drug dealers and the number of police officers in a neighborhood. Figure 14: Neighborhood drug intervention negative feedback Car Pools:Figure 15 shows a negative feedback process that maintains a balance between car pools and gasoline consumption. For example. This. in turn. the implicit goal of the loop in Figure 11 is zero elephants. if the loop were to act. in a sense. which reduces the total number of vehicles on the road.
Figure 16: Generic negative feedback structure with explicit goal An alternative and (often) more desirable way to represent negative feedback processes via causal loop diagrams is by explicitly identifying the goal of each loop. goal). 8 of 12 10/10/2010 7:19 PM .e. This action reduces the size of the herd and brings it into line with the desired number of elephants. eventually all of the elephants would die and the population would be zero. but is also (realistically) not zero. In Figure 14. A more concrete example of a negative feedback structure with an explicit goal is shown in Figure 17.systemdynamics. hunting -.e. corrective action is called forth that moves the system back into line with its desired state. In the figure. The same sort of logic applies to Figure 12 and Figure 13.The logic gets even murkier in the case of Figure 14 and Figure 15.. In Figure 15. any time a discrepancy develops between the state of the system and the desired state of the system (i. Figure 16. shows a causal loop diagram of a generic negative feedback structure with an explicit goal. corrective action -. for example.htm of time. there is an implicit goal of an acceptable or tolerable gasoline price. The logic of this loop says that.http://www..i. in which the loops implicitly seek goals of zero itching and zero hunger respectively. there is an implicit goal of an "acceptable" or "tolerable" level of drug dealers in the neighborhood. If the actual number of elephants begins to exceed the desired number.is called forth. a distinction is drawn between the actual number of elephants in a herd and the desired number of elephants in the herd (presumably determined by a knowledge of the carrying capacity of the environment supporting the elephants). which may or may not be zero. which is certainly a lower price rather than a higher price.org/DL-IntroSysDyn/feed.
things can get rather complicated. The last and most important feature is that. it is impossible for someone to accurately think through.http://www. This figure has a number of features that are important to mention. The second is that the authors have taken great care to choose variable names that have a clear sense of direction and have real-life counterparts in the actual system . Figure 18 is a causal loop diagram of a system dynamics model created to examine issues related to profitability in the paper and pulp industry. This is usually done when a system dynamicist is attempting to present the basic ideas embodied in a model in a manner that is easily understood. without having to discuss in detail. although the figure provides a sweeping overview of the feedback structure that underlies profitability problems in the paper and pulp industry. the dynamics of the paper and pulp system from Figure 18 alone. when causal loop diagrams are used in this fashion. As Figure 18 and Figure 19 show.org/DL-IntroSysDyn/feed. The first is that the authors have numbered each of the positive and negative loops so that they can be easily referred to in a verbal or written discussion.htm Figure 17: Example of negative feedback structure with an explicit goal Examples of Interacting "Nests" of Positive and Negative Loops In system dynamics modeling. 9 of 12 10/10/2010 7:19 PM . or mentally simulate.systemdynamics. causal loop diagrams are often used to display "nests" of interacting positive and negative feedback loops. In other words. it cannot be used to determine the dynamic behavior of the model (or of the actual system).
10 of 12 10/10/2010 7:19 PM . as with Figure 18.http://www. it is clear that a decision maker would find it impossible to think through the dynamic behavior inherent in the model. The first is that the model's negative feedback loops are identified by "C's. is that thicker lines are used to identify the feedback loops and links that author wishes the audience to focus on. variables at the heads of arrows). from inspection of Figure 19 alone. a number of this figure's features are worth mentioning. variables at the tails of arrows) and effects (i. Third. This is also a common system dynamics diagramming convention . As with Figure 18.htm Figure 18: Causal Loop Diagram of a Model Examining Profitability in the Paper and Pulp Industry Figure 19 is a causal loop diagram of a system dynamics model created to examine forces that may be responsible for the growth or decline of life insurance companies in the United Kingdom..org/DL-IntroSysDyn/feed. The second is that double slashes are used to indicate places where there is a significant delay between causes (i.systemdynamics. Last.e. This is a common causal loop diagramming convention in system dynamics." which stand for "Counteracting" loops.e..
Fixes that Fail. including: Balancing Process with Delay. Control Intended-Compromise Achieved. that seem to describe many situations that frequently appear in public and private sector organizations. Limits to Growth.systemdynamics. however. Eroding Goals. presented via causal loop diagrams. more precisely. the decision maker can then attack the root causes of the problem from an holistic and systemic perspective . Control Intended-Unwanted Growth Achieved. Shifting the Burden. 11 of 12 10/10/2010 7:19 PM .org/DL-IntroSysDyn/feed. have suggested that the number can be reduced to four: Growth Intended-Stagnation/Decline Achieved. Recent efforts. Success to the Successful. and Growth Intended At Expense to Others . Escalation. and Growth and Underinvestment . nine archetypes have been identified and cataloged by systems thinkers. Archetypes An area of the field of system dynamics or. Tragedy of the Commons. of the much broader field of "systems thinking.htm Figure 19: Causal Loop Diagram of a Model Examining the Growth or Decline of a Life Insurance Company ." that has recently received a great deal of attention is archetypes . Presumably.http://www. Currently. Archetypes are generic feedback loop structures. Archetypes are thought to be useful when a decision maker notices that one of them is at work in his or her organization.
it is impossible.systemdynamics." or nonlinear relationships. they can blur direct causal relationships between flows and stocks. occurs when a decision maker tries to use them. As a result.htm No matter what the true number archetypes is or will be. to determine the dynamics of a system . Causal loop diagrams are inherently weak because they do not distinguish between information flows and conserved (noninformation) flows. to determine the behavior of a system solely from the polarity of its feedback loops. The only potential problem with causal loop diagrams and archetypes then. Further. Finally. the central question remains unanswered: How successful are archetypes in helping decision makers solve problems in their organizations? Problems with Causal Loop Diagrams Causal loop diagrams are an important tool in the field of system dynamics modeling.org/DL-IntroSysDyn/feed. in lieu of simulation. they are particularly helpful when used to present important ideas from a model that has already been created . "hidden loops. not feedback. net rates. Although some system dynamicists use causal loop diagrams for "brainstorming" and model creation. their usefulness as a tool for predicting and understanding dynamic behavior is further weakened. however. Almost all system dynamicists use them and many system dynamics software packages support their creation and display. since causal loop diagrams do not reveal a system's parameters. 12 of 12 10/10/2010 7:19 PM . in principle.http://www. The conclusion is that simulation is essential if a decision maker is to gain a complete understanding of the dynamics of a system . because stocks and flows create dynamic behavior.
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