Society is dependent upon electricity. In the last decade international scale outages have occurred with unfortunate regularity. While the impact of these outages has been limited to a few hours or days, they have been expensive and prompted fears that more severe failures could occur. While crises are perceived as events, their true origins come from the pre-crisis and post-crisis phases, where preparations and learning set the stage for the successful management of unusual events. A power crisis of a few weeks duration can set the policy agenda for many years. In this paper we describe a crisis model that captures the dynamic state of a power grid, the effects of failure on clients, government, and the public. The model was developed in concert with and validated by a panel of crisis managers. These factors combine to determine the post-crisis policies and socio-political factors that influence policy over much longer timeframes.
System Dynamics (SD) main aim is to study dynamic behavior of systems based on causal relations. The other purpose of the science is to design policies, both in initial values and causal relation, to change system behavior as we desire. Especially we are interested in making systems behavior a convergent one. Although now SD is mainly used in situations of single policy maker, there are major parts of situations in which there are multi policy makers playing role. Game Theory (GT) is an appropriate tool for studying such cases.GT is the theory of studying multi decision-maker conditions. In this paper we will introduce GT and explain how to apply it in SD. Also we will provide some examples of microeconomic systems and show how to use GT for studying and simulating dynamics of these example systems. We will also have a short discuss on how SD can help GT studies.
Vulnerability black markets (VBMs) are sites for trading malicious tools targeting software vulnerabilities. VBMs enable different actors to access malware and use them to attack vulnerable computers. This article presents an economic rationale for the existence and continuity of VBMs. It is assumed that buyers and sellers decision to trade in the black markets depend upon their perceived costs and benefits. As long as the expected utilities of engaging in the black markets are higher than the costs, buyers and sellers will continuously trade in VBMs. A system dynamics (SD) model is developed to capture such problem. Concepts from market-for-crimes theories are adopted into the model, since they provide a useful perspective for explaining criminal behavior such as in VBM.
The fundamental objective of this paper is to present a dynamic framework to test the two competing theories; the Pecking Order Theory (POT) and the Trade-off Theory (TOT); that explain the capital structure behavior of firms. For this purpose we use System Dynamics (SD) method to develop a generic simulation model of a manufacturing firm based on generally accepted accounting principles. We model the capital structure decision conforming to POT and TOT to test the two competing theories, in isolation and in combination. The firms may pursue POT or TOT for their capital structure decision, but it is generally agreed that while doing so their prime objective is to maximize the firm value. Hence we presume that the managers stick to the core objective of firm value maximization.