Introduction to System Dynamics

Complex Systems Simulation

Adopted from

Erik R Larsen
Cass Business School, City University, London
Faculty of Economics and Management, USI, Lugano, Switzerland
 Overview
• Introduction
– Participants
– Lecturer
• Introduction to the course
• Brief history of System Dynamics
• Introduction to Systems Thinking
Understanding feedback and delays in social
and organizational systems
• From Mapping to Simulation
Building simulation models with teams. From
models to microworlds
 Open-Loop Thinking

Gather Evaluate Select

Identify Problem Implement
Data Alternatives Solution
Complex System Thinking
 Characteristics of Complex Systems

• Tightly Coupled
“Everything influences everything else”
“You can’t just do one thing”
• Dynamic
Change occurs at many time scales
• Policy Resistant
Many obvious solutions to problems fail or actually worsen the
situation.
• Counterintuitive
Cause and effect are distant in time and space
• Exhibit Tradeoffs
Long term behaviour is often different from short term behaviour
 System Dynamics
Events

Behaviour

System Structure

As we move our perspective from the event level to the

structural level, we have a better understanding of what
is really going on in a system. We also increase our
ability to influence and change the system’s behaviour,
i.e.,we can make adjustments to the structure which are
consistent with the behaviour we would like to produce.
 Reference Mode
Whenever we study a system, we are interested in a
certain ‘problem’, i.e., we are trying to explain a
system’s behaviour or its

reference mode

25

20

15
Sales

10

0
1 6 11 16 21 26 31
Time
Anatomy of a Causal Loop Diagram

Causal relationship The ‘S’ means that the

between two variables two variables move in the
same direction, all other
things being equal
S (+)

Amount
Hunger B
Eaten
O (-)

The ‘O’ means that the

two variables move in Nature of loop. Indicates
opposite directions, all whether the loop is
other things being equal balancing or reinforcing
 Reinforcing Loop

Causal relationship The ‘S’ means that the

between two variables two variables move in the
same direction, all other
things being equal

Interest R Balance
S
 Increasing Crime

“Drugs are a big worry for me. Not least

Events
because of the crimes that people
commit to fund their dependency. We
Behaviour want the policy to bust these rings and
destroy the drugs. They say they’re
doing it and they keep showing us
System Structure
sacks of cocaine that they seized but
the crime problem seems to be getting
worse”
 Increasing Crime

What are the main variables described in the statement?

Events

Behaviour
What is the reference mode (behaviour) of this system?

System Structure

Time
 Increasing Crime
What is the structure of this system?
What is the causal loop diagram which
explains the observed behaviour?
Events

Call for Police

Drug Related Action
Behaviour Crime

Drug Seizures
Price
System Structure
Supply

Demand
Telling a Story Based on a Conceptual Model

Seeing the patterns that control events

• Reinforcing Loops
– Engines of growth and decline
• Balancing Loops
– Goal seeking processes and limits to growth
• Delays
– When results take time
Taking a Shower: The Movie
 Managing Water T in a Shower

34

32

30
Water T

28

26

24

22
0 10 20 30 40 50 60 70 80 90 100 110 120
Time

What do you think would happen in a more complicated setting,

where you have to share the supply of hot water (critical resource)
with someone/something else?
Managing Water T in a Shower

S Water
Temperature
Desired
Temperature

O
Tap setting
T Gap
(A-D)
S
 Managing Water T in Two Showers

Desired Desired
Temperature B Temperature A
O
S Water
Temperature A
S
Tap setting
B
T Gap B
(A-D) B B
O
O
Tap setting
A T Gap A
S
Water (A-D)
Temperature S
B O
 Managing Water T in Two Showers

38

33
Water T

28

23

18
0 10 20 30 40 50 60 70 80 90 100 110 120
Time