Misperception of Feedback

In an inventory management problem, Kleinmuntz (1993: 226) observed that as both delays and complexity increased, performance of those making decisions intended to manage the inventory deteriorated. There are many examples of this deterioration of our decision-making capability when we fail to understand the feedback dynamics that operate. We are most likely to make reliable decisions when previous decisions and observed feedback effects are juxtaposed. This is infrequently the case. What is described here is what is known as the ‘misperception of feedback’ or more correctly the ‘misperception of the implications of feedback’. It is also described by Sterman (1989a; 1989b; and 1989c.). What underlies and produces dynamic behaviour is frequently masked. We need ways of discovering these mechanisms before we can appreciate why systemic response to remedial strategies we implement are often counter-intuitive. For this we call upon the power of system dynamics modelling. Without it we might continue to rely on extant and often inappropriate decision heuristics. We need to be able to uncover the complex set of interrelationships and underlying operating mechanisms that produce the observed dynamic responses.