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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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Anything that can be described as a vicious or virtuous circle can be classified as a positive feedback process. Generally speaking. describe goal-seeking processes that generate actions aimed at moving a system toward. Thus. when linked. Causal Loop Diagramming In the field of system dynamics modeling.http://www. or keeping a system at. Positive loops portray self-reinforcing processes wherein an action creates a result that generates more of the action. Causal loop diagrams are maps of cause and effect relationships between individual system variables that. negative feedback processes stabilize systems. on the other hand. Negative feedback loops. form closed loops. they are responsible for the growth or decline of systems. Generally speaking. although they can occasionally work to stabilize them . a desired state. positive feedback processes destabilize systems and cause them to "run away" from their current position.systemdynamics. although they can occasionally destabilize them by causing them to oscillate.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 . positive and negative feedback processes are often described via a simple technique known as causal loop diagramming. 2 of 12 10/10/2010 7:19 PM . and hence more of the result.org/DL-IntroSysDyn/feed.
Variable C would fall (i. This can be seen by tracing through the effect of an imaginary external shock as it propagates around the loop.e.e. move in the same direction as Variable B).. acts to stabilize the system -i...systemdynamics. for example. By contrast. More specifically.. the variable at the tail of each arrow in Figure 3 causes a change in the variable at the head of each arrow. ceteris paribus. whether the loop itself is positive or negative -.in a causal loop diagram.. move it back towards its state prior to the shock. move in the opposite directionas Variable C). the letter "C" (for "Counteracting"). If an external shock were to make Variable A fall..http://www. a large minus sign indicates a negative loop. Variable D would rise (i. In the figure. move in the same direction as Variable D). the arrows that link each variable indicate places where a cause and effect relationship exists. presents a generic causal loop diagram. move in the same direction as Variable D). move in the opposite direction as Variable C). Variable D would rise (i. in the same direction (in the case of a plus sign). and Variable A would rise (i.that is. is indicated by a symbol in its center. and Variable A would rise even further (i.e. 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. A large plus sign indicates a positive loop. the letter "B" (for "Balancing"). Variable B would rise (i. Variable C would fall (i. if a shock were to suddenly raise Variable A in Figure 3.e. 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. Variable B would fall (i. For example.. negative feedback loop structure Occasionally.e. causal loop diagrams are drawn in a manner slightly different from those shown in Figure 3 and Figure 4.. In Figure 3 the loop is positive and defines a self reinforcing process.org/DL-IntroSysDyn/feed. or in the opposite direction (in the case of a minus sign) . More specifically. 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.e. 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. move in the opposite direction as Variable A). or an Figure 5: Alternative Causal Loop 3 of 12 10/10/2010 7:19 PM . The rise in Variable A after the shock propagates around the loop. move in the opposite direction as Variable A). Figure 3: Generic causal loop diagram The overall polarity of a feedback loop -.e. To indicate a negative loop. The Figure 4: Generic causal loop diagram of a shock is thus counteracted by the system's response.. move in the opposite direction as Variable B).e.htm Figure 3. Figure 4 presents a generic causal loop diagram of a negative feedback loop structure.
In this same way. the Elephant Birth rate drives the Elephant Population that drives Elephant Birth rate .systemdynamics.htm icon of a teetertotter is used . an increase in the level of national debt will increase the amount of the interest paid each year.http://www.positive feedback. Figure 7: Positive Loop Showing Growth in the National Debt Due to Compounding Interest Payments 4 of 12 10/10/2010 7:19 PM . Diagramming Conventions In order to make the notion of feedback a little more salient. Positive Feedback Examples Population Growth/Decline: Figure 6 shows the feedback mechanism responsible for the growth of an elephant herd via births. we say that if the birth rate of the herd were to increase.org/DL-IntroSysDyn/feed. First. Figure 5 illustrates these different causal loop diagramming conventions. disconnected from the other parts of the systems to which they belong). As these loops are shown in isolation (i. the Elephant Population would increase. we can say that if . 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.the Elephant Population of the herd were to increase.. 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. Figure 6 to Figure 17 present a collection of positive and negative loops.e. In this same way. the birth rate of the herd would increase. their individual behaviors are not necessarily the same as the overall behaviors of the systems from which they are taken. For a given elephant herd.over time . Thus. In this simple example we consider two system variables: Elephant Births and Elephant Population.
An overall economic downturn caused the rate of bank failures to increase.http://www. Country A moves to further increase its military capability. an "arms race" can be described as a self-sustaining competition for military superiority. An arms race is driven by the perception that one's adversary has equal or greater military strength. From the diagram. in turn. 5 of 12 10/10/2010 7:19 PM . the number of bank failures per year will decrease. This caused even more banks to fail. The relationship Figure 9: Bank panic is a positive feedback process. in turn. 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. The relationship between the banking industry's health and the rate of bank failures is also negative. Figure 8 shows the feedback mechanism responsible for the spiraling decline of the banking system during this period. Figure 8: Arms Race is a Positive Feedback Process. causes Country A to feel more threatened. Country B's action. In its simplest form. As more banks failed. the health of the bank decreases as capital reserves are drawn down. This means that if the health of the banking industry increases. The relationship between withdrawals and bank health is negative (-) or opposite (O). which further reduced the banking industry's capital reserves. Thus.systemdynamics.htm Arms Race: Figure 8 shows a generic arms race between Country A and Country B. In this case. prompted many to withdraw their savings from banks. the public's fear of not being able to withdraw their own money increased. Country B interprets this as a threat and responds in-kind with its own increase in military capability. This means that if the rate of bank withdrawals increases.org/DL-IntroSysDyn/feed. we say that the two system variables "move" in the same (S) or positive (+) direction. we see that the frequency of bank failures increases public concern and the fear of losing their money. This vicious cycle was clearly seen during the 1930s. between the "fear of not being able to withdraw money" and the rate at which bank withdrawals are made is also positive. This. If Country A moves to increase its military capability.
These two relationships combine together to form a negative feedback loop.e. A plus sign indicates this complimentary behavior. Figure 12 and Figure 13 are two simple and familiar examples of negative feedback processes. an increase in the herd's death rate.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 . Figure 12 shows the negative feedback process responsible for the dissipation of Itching due to Scratching. the Elephant Population will decrease. Figure 13 considers the negative feedback involved in Eating to reduce Hunger. 6 of 12 10/10/2010 7:19 PM . the feedback structure between Elephant Population and Elephant Death rate.http://www. we saw how an elephant population and its corresponding birth rate form a positive feedback loop. An increase in one's Hunger causes a person to eat more food. Increasing in the rate food consumption. we consider the other half of the equation.. The causal influence of Elephant Population to Elephant Death rate is just the opposite. If the Elephant Death rate increases. that is. in turn. reduces Hunger. i. Now. A negative sign indicates this counteracting behavior.systemdynamics.org/DL-IntroSysDyn/feed. Figure 11 shows the negative feedback process responsible for the decline of an elephant herd via deaths. Figure 11: Elephant population negative feedback loop. Figure 10: Feedback structure responsible for growth high school drug use Negative Feedback Examples Population Growth/Decline:In Figure 6. An increase in the number of elephants in the herd means that a proportionally larger number of elephants will die each year.
in isolation. That is. An increase in gasoline consumption increases gasoline price (supply reduction). which reduces the total number of vehicles on the road. if the loop were to act. in a sense. reduces gasoline consumption. for a substantial period 7 of 12 10/10/2010 7:19 PM .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. As the number of police officers increase. the implicit goal of the loop in Figure 11 is zero elephants. 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.http://www. 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.systemdynamics. Figure 15: Gasoline consumption negative feedback Implicit and Explicit Goals The negative feedback loops presented in Figure 11 through Figure 15 are. This. in turn. more arrests are made and the number of drug dealers is reduced. A higher gasoline price pushes many individual motorists to join carpools. For example. misleading because the goals they are seeking are implicit rather than explicit.
which may or may not be zero.systemdynamics.e. for example. In the figure.. 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. hunting -. goal). The logic of this loop says that. there is an implicit goal of an acceptable or tolerable gasoline price. there is an implicit goal of an "acceptable" or "tolerable" level of drug dealers in the neighborhood. any time a discrepancy develops between the state of the system and the desired state of the system (i. If the actual number of elephants begins to exceed the desired number. In Figure 15. which is certainly a lower price rather than a higher price.org/DL-IntroSysDyn/feed. 8 of 12 10/10/2010 7:19 PM .http://www. A more concrete example of a negative feedback structure with an explicit goal is shown in Figure 17.i. but is also (realistically) not zero. In Figure 14.. shows a causal loop diagram of a generic negative feedback structure with an explicit goal.is called forth. corrective action is called forth that moves the system back into line with its desired state. This action reduces the size of the herd and brings it into line with the desired number of elephants.e. corrective action -.htm of time. 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).The logic gets even murkier in the case of Figure 14 and Figure 15. eventually all of the elephants would die and the population would be zero. The same sort of logic applies to Figure 12 and Figure 13. Figure 16. in which the loops implicitly seek goals of zero itching and zero hunger respectively.
the dynamics of the paper and pulp system from Figure 18 alone. This figure has a number of features that are important to mention.org/DL-IntroSysDyn/feed. without having to discuss in detail. As Figure 18 and Figure 19 show. although the figure provides a sweeping overview of the feedback structure that underlies profitability problems in the paper and pulp industry. 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. when causal loop diagrams are used in this fashion. things can get rather complicated. 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. or mentally simulate.http://www. it cannot be used to determine the dynamic behavior of the model (or of the actual system). In other words.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 . it is impossible for someone to accurately think through. causal loop diagrams are often used to display "nests" of interacting positive and negative feedback loops. 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 . The last and most important feature is that.systemdynamics. 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.
http://www. This is a common causal loop diagramming convention in system dynamics.e. variables at the tails of arrows) and effects (i.e. The first is that the model's negative feedback loops are identified by "C's. Last.. The second is that double slashes are used to indicate places where there is a significant delay between causes (i.. from inspection of Figure 19 alone.systemdynamics.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. it is clear that a decision maker would find it impossible to think through the dynamic behavior inherent in the model. As with Figure 18." which stand for "Counteracting" loops. Third. variables at the heads of arrows). as with Figure 18. is that thicker lines are used to identify the feedback loops and links that author wishes the audience to focus on. 10 of 12 10/10/2010 7:19 PM .org/DL-IntroSysDyn/feed. This is also a common system dynamics diagramming convention . a number of this figure's features are worth mentioning.
more precisely.http://www. Fixes that Fail. have suggested that the number can be reduced to four: Growth Intended-Stagnation/Decline Achieved. the decision maker can then attack the root causes of the problem from an holistic and systemic perspective .htm Figure 19: Causal Loop Diagram of a Model Examining the Growth or Decline of a Life Insurance Company . 11 of 12 10/10/2010 7:19 PM . including: Balancing Process with Delay. Archetypes are generic feedback loop structures. that seem to describe many situations that frequently appear in public and private sector organizations. Tragedy of the Commons.systemdynamics. Control Intended-Unwanted Growth Achieved. Archetypes An area of the field of system dynamics or. Escalation. Presumably. and Growth Intended At Expense to Others . of the much broader field of "systems thinking. and Growth and Underinvestment . Recent efforts. Success to the Successful. nine archetypes have been identified and cataloged by systems thinkers.org/DL-IntroSysDyn/feed. Shifting the Burden. however. Currently. Limits to Growth." that has recently received a great deal of attention is archetypes . Archetypes are thought to be useful when a decision maker notices that one of them is at work in his or her organization. Control Intended-Compromise Achieved. Eroding Goals. presented via causal loop diagrams.
systemdynamics. Almost all system dynamicists use them and many system dynamics software packages support their creation and display.htm No matter what the true number archetypes is or will be. As a result. "hidden loops. to determine the dynamics of a system . 12 of 12 10/10/2010 7:19 PM . since causal loop diagrams do not reveal a system's parameters. net rates. their usefulness as a tool for predicting and understanding dynamic behavior is further weakened. Further. because stocks and flows create dynamic behavior. they can blur direct causal relationships between flows and stocks. however. it is impossible. The only potential problem with causal loop diagrams and archetypes then. to determine the behavior of a system solely from the polarity of its feedback loops." or nonlinear relationships. in principle. in lieu of simulation.http://www.org/DL-IntroSysDyn/feed. they are particularly helpful when used to present important ideas from a model that has already been created . not feedback. 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. occurs when a decision maker tries to use them. Finally. Although some system dynamicists use causal loop diagrams for "brainstorming" and model creation. Causal loop diagrams are inherently weak because they do not distinguish between information flows and conserved (noninformation) flows. The conclusion is that simulation is essential if a decision maker is to gain a complete understanding of the dynamics of a system .
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