Abstract
In this paper, we look at the way perceptions – a vital component of any decision-making process – are modeled in System Dynamics (SD) models. SD models include perceptions as a factor translating actual into observed conditions. System dynamicists assume that true conditions are not available to decision makers and thus, should not be used directly in decision policies in a model. Instead perceived conditions are used. Typically, perception is modeled by using an information delay that represents time delays inherent in forming perceptions. Perception formation, however, entails more than just time delays. In this paper, we aim to broaden the definition and use of perception in SD models by paying attention to the possible roles heuristics play in perception formation. We present a generic structure that can be used to model several heuristics. We present three examples: availability heuristic, recency/primacy effects, and selective perception. We conclude that this structure may be used in combination with information delays to capture a broader range of perception errors in human decision making, in SD as well as other OR approaches that pertain to model human behavior and decision making.
