Morecroft, John D. W., "System Dynamics: Portraying Bounded Rationality", 1981
ua435
This paper examines the linkages between system dynamics and the Carnegie school in their treatment of human decision making. It is argued that the structure of system dynamics models implicitly assumes bounded rationality in decision making and that the recognition of this assumption would aid system dynamicists in model construction and in communication to other social science disciplines. The paper begins by examining Simon’s “Principles of Bounded Rationality” which draws attention to the cognitive limitations on the information gathering and processing powers of human decision makers. Forrester’s “Market Growth Model” is used to illustrate the central theme that system dynamics models are portrayals of bounded rationality. Close examination of the model reveals that the information content of decision functions is limited and that the information is processed through simple rules of thumb. In the final part of the paper there is a discussion of the implications of Carnegie philosophy for system dynamics, as it affects communication, model structuring and analysis, and future research.